Request for Proposal #50077

Lead Agency Advertising Services

July 28, 2017

CALIFORNIA STATE LOTTERY 700 North 10th Street

Sacramento, California 95811-0393

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TABLE OF CONTENTS

I. GENERAL INFORMATION Page A. Purpose .............................................................................................. 1 B. Background ......................................................................................... 1 C. The Opportunity .................................................................................. 1 D. The Challenge ..................................................................................... 2 E. Summary of Wants, Needs and Expectations ..................................... 2 F. Minimum Agency Qualifications .......................................................... 5 G. Issuing Office and Agency-Initiated Contact ........................................ 5 H. Projected Timetable ............................................................................ 6 I. Verbal Communication ........................................................................ 6 J. Examination of All Requirements ........................................................ 7 K. Amendments to the RFP ..................................................................... 7 L. Written Questions ............................................................................... 7 M. Written Intent to Bid ............................................................................. 7 N. Property of the Lottery ......................................................................... 8 O. Proposals are Public Records ............................................................. 8 P. Acceptance Period .............................................................................. 8 Q. Conditions of Submission .................................................................... 8 R. Nonmaterial Deviation ......................................................................... 8 S. Rejection of Proposals ........................................................................ 8 T. Contract Execution .............................................................................. 9 U. Hiring of Lottery Personnel .................................................................. 9 V. Governing Law and Regulations ......................................................... 9 W. Joint Proposals/Joint Contractors ........................................................ 9 II. PROPOSAL REQUIREMENTS A. Phase I Submittals and Evaluation Criteria ......................................... 10 B. Phase I Evaluation .............................................................................. 13 C. Phase II Semi-Finalist ......................................................................... 14 D. Phase II Semi-Finalist Competition ..................................................... 14 E. Phase II Semi-Finalist Evaluation ........................................................ 14 F. Phase III Finalist Submittals ................................................................ 14 G. Phase III Finalist Competition .............................................................. 15 H. Phase III Finalist Evaluation ................................................................ 16 III. PROPOSAL EVALUATION PROCESS A. Ratings ................................................................................................ 16 B. Best Value Analysis ............................................................................ 17 IV. PHASE I SUBMITTALS PACKAGING AND DELIVERY A. Packaging ........................................................................................... 17 B. Delivery ............................................................................................... 18 EXHIBITS Exhibit A - Scope of Services................................................................................. 19 Exhibit B - Draft Contract Terms and Conditions.................................................... 20 Exhibit C - Cost Audit Guidelines ........................................................................... 45

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ATTACHMENTS Attachment 1 Agency Fact Sheet .................................................................... 48 Attachment 2 Certification ................................................................................ 51 Attachment 3 Guaranty .................................................................................... 57 Attachment 4 Disabled Veteran Business Enterprise Participation................... 59 Attachment 5 Small and Micro Business Participation ..................................... 63 Attachment 6 Major Agency Disclosure ........................................................... 69

RFP #50077 July 28, 2017 1

I. GENERAL INFORMATION

A. Purpose The California State Lottery (Lottery) is inviting responses through this Request for

Proposal (RFP) from qualified agencies to provide lead advertising and integrated marketing services for all Lottery products with the objective of maximizing contributions to public education. The Lottery will also consider proposals from partnerships and joint ventures, for example, a creative advertising agency and a media agency. The initial term of the proposed contract resulting from this RFP will be five years. The Lottery may unilaterally extend the term of the contract under the same terms and conditions, including pricing terms, for up to two additional one-year terms.

B. Background

The Lottery’s mission is to generate supplemental funding for public education. Fiscal Year 2016/17 was another strong year for the Lottery, with sales of approximately $6.3 billion and nearly $1.5 billion earned for California public schools. Lottery products are sold statewide at more than 22,000 retail locations, from independent neighborhood shops to convenience stores, liquor stores to supermarkets, and more. The Lottery’s retail product offerings include an average of 24 fun and entertaining Scratchers® games and several draw games, including jackpot games such as Powerball®, Mega Millions®, and SuperLotto Plus®, and daily games such as Fantasy 5 and Hot Spot®. Through the alignment of product plans, marketing campaigns, and sales team efforts, the Lottery has grown to be the second largest lottery in the U.S. The Lottery’s goal is to become the largest lottery in the U.S. The Lottery’s current general market agency partner is David & Goliath, LLC (D&G), with its subcontractor Initiative handling media planning and buying. D&G’s contract expires August 18, 2018.

Additionally, the Lottery has contracts with the following agencies:

• Casanova//McCann for Spanish language consumer advertising

• Time Advertising for Asian in-language consumer advertising

• Muse Communications for African American consumer advertising

• Alcone Marketing Group for point-of-sale and promotional marketing

• Olson + Co for digital services

C. The Opportunity

The Lottery is seeking a strategic agency partner (Agency) capable of helping it to approach the consumer in an innovative way. The Agency must be able to address critical issues facing the Lottery, including but not limited to the following:

• Where should the Lottery take its brand and messaging?

• How should the Lottery communicate with and reach California’s diverse population through marketing and advertising efforts?

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• How can the Lottery increase frequency of play by casual players and introduce new players to the Lottery?

• How can the Lottery re-engage lapsed players?

• How can the Lottery segment its audience more effectively and broaden its player base?

• How can the Lottery ensure that it continues to be relevant in the ever-changing consumer landscape and with new generations of California adults?

• How can the Lottery improve its brand perception?

• How can the Lottery position itself as a fun and entertaining brand?

• How can the Lottery increase sales and, in turn, maximize contributions to public education?

D. The Challenge

The advertising landscape continues to evolve dramatically as technology continues to change consumer media behavior and marketing realities. Understanding player motivation and helping to better differentiate and position the Lottery’s games and its various brands to enhance consideration and increase sales will be a critical role for the Lottery’s Agency moving forward. The Agency must be able to combine rigorous and insightful account planning and strategic development with brilliant creative solutions that drive sales and stand out in a post-digital, fragmented media world where consumers need to be continually re-engaged and re-motivated to play. The Lottery expects the Agency to function as a true partner, challenge the status quo, and lead the way to meaningful strategy combined with media and creative solutions that drive brand and product demand while maximizing contributions to public education through increased sales.

Maximization of the Lottery’s media investment is critical for optimal return on investment (ROI). The Lottery seeks to increase the alignment of its creative and media strategies using cutting-edge technology to meet ongoing and evolving expectations of empowered customers who are less enticed by traditional advertising.

E. Summary of Wants, Needs and Expectations

The Lottery needs a strategically-based, highly creative Agency with best-in-class capabilities in media planning, buying, and analytics across all channels, including traditional, digital, social, and mobile to handle integrated advertising and navigate future challenges and opportunities. The Lottery is seeking an Agency capable of developing breakthrough work and highly-integrated omnichannel strategies that deliver contextually-relevant communications and experiences that elevate the Lottery’s brand and drive sales.

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The Lottery seeks an Agency that will:

• Foster an environment where “partnering with the Lottery” and “thinking outside of the box” are part of the Agency culture;

• Demonstrate unequivocal marketplace success at building and sustaining brands in positions of category leadership;

• Deliver breakthrough creative based on consumer insights driven by a diverse set of data sources to generate sales. Specifically, demonstrate outstanding creative capabilities across all media channels (traditional/non-traditional/ digital/ mobile/ social);

• Demonstrate innovation in media and communications planning; be on the cutting edge of the latest ad tech, including econometric modeling to inform and evaluate media plans and enhance ROI;

• Demonstrate expertise in leveraging data-driven consumer insights to inform creative and media-buying strategies;

• Embrace a total-market approach, integrating broad and targeted marketing to address California’s diverse population;

• Provide an integrated marketing mindset and seamless integration across a world class suite of services and relevant best-in-class resources – particularly in media planning and buying as well as digital creative and media.

• Deliver best-in-class account leadership with strong involvement in the strategic process and the ability to lead integration across all projects to ensure consistency and excellence in the Agency’s work product;

• At the Lottery’s direction, provide effective leadership and a collaborative approach with other agency partners, third parties, and internal Lottery teams to foster cross-team collaboration and minimize foundational disagreements; and

• Commit a team of experienced professionals to the account that is fully immersed in the business from top to bottom, takes initiative, and continually strives to improve.

Preferred Experience: The ideal Agency will have a successful track record of:

• Developing and executing innovative brand- and transaction-focused creative based on strategic account planning and insightful strategy development that drive sales;

• Developing highly-integrated, consumer-centric communications programs across different media and channels with a significant digital/new-technologies focus;

• Developing best-in-class digital and social media programs;

• Experience with clients in gaming and entertainment industries; and

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• Experience with low-cost consumer products sold in convenience stores, liquor stores, and supermarkets.

Media Capabilities: The ideal Agency will have a successful track record of:

• Developing innovative and integrated cross-channel communications plans, where creative strategy and media strategy are aligned from the beginning and messaging leverages the inherent value of each specific medium to meet desired objectives;

• Best-in-class media research, tools, and analytics, including audience insights, programmatic buying for established and emerging formats, cross-channel measurement and attribution, and econometric models to inform and evaluate media plan performance and optimize media ROI;

• Best-in-class media buying across all relevant and emerging channels, including local broadcast (TV and radio), out-of-home, print, and digital (social, mobile, and search media);

• Expertise in handling traditional and digital syndication and branded content; and

• Delivering optimal rates and added value to enhance overall ROI. Digital & Mobile: The Lottery expects its Agency to be on the cutting edge of marketing and the latest technologies in digital, mobile, and emerging platforms. With the continual growth of consumer usage of digital devices for entertainment and information, these are important channels to reach our consumers. The Agency will be responsible for developing, executing, and tracking integrated digital campaigns including search marketing.

Please note that the Lottery’s website and mobile app are managed in-house. Social Media: The Lottery wants to increase social media marketing efforts on new and existing platforms. At the Lottery’s direction, the Agency will be responsible for creating real-time, data-driven strategic plans that include content production and influencer marketing to grow awareness and engagement. Production: The Lottery is seeking best-in-class digital and broadcast/television video production capabilities and experience, including off-line editing, talent, and business affairs. Research: Conduct market research studies (e.g. recall tests, copy and motivation tests, media weight tests, and attitude studies), that assist the Lottery in the areas of strategic planning, retailer attitudes and retail audits. These studies may be qualitative or quantitative and may be ad hoc or ongoing projects. Promotions and Experiential Marketing: The Lottery needs an Agency that can bring fresh thinking and big ideas outside of traditional advertising and media channels to its marketing efforts. The Agency may be responsible for developing experiential and

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promotional programs that forge deeper engagement between the Lottery and its players.

Public Relations: The Lottery may require its Agency to provide integrated PR capabilities in the areas of media relations, crisis communications, event management, and cross-cultural outreach.

F. Minimum Agency Qualifications

This RFP is open to all agencies and joint ventures that, at the time Phase I Submittals are due, meet the following minimum qualifications. Qualified agencies must:

1. Have a minimum of 50 employees;

2. Have had at least $20 million in revenue for calendar year 2016;

3. Have a minimum of 15% of the agency’s work product for calendar year 2016 in digital

marketing efforts;

4. Be legal business entities licensed to do business in California;

5. Have an existing office in California and maintain it for the duration of the contract; and

6. Meet the requirements as set forth in Section II, Phase I Submittals.

G. Issuing Office and Agency-Initiated Contact

This RFP is issued by the Lottery’s Contract Development Services office. The issuing office is the sole point of contact regarding this RFP. All notices or questions pertaining to this RFP must be directed to: California State Lottery

Contract Development Services Attention: John Muise 700 North 10th Street Sacramento, California 95811 Phone: (916) 822-8062 TDD: (800) 345-4275 Email: jmuise@calottery.com

No contact regarding this RFP will be allowed between agencies or potential agencies and members of the Evaluation Team, Lottery Commissioners, or Lottery staff after issuance of the RFP with the exception of the Lottery contact person named above. Any such contact may disqualify an agency from further consideration. Requests for clarification from agencies will be allowed, provided such requests are made through the above contact.

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H. Projected Timetable TBD

The following projected timetable is subject to change and is provided for informational and planning purposes only. The Lottery may change these dates without amending this RFP.

Action Date Time

RFP Issued July 28, 2017 Intents to Bid/Written Questions Due August 16, 2017 5:00 pm PST Responses to Written Questions As Needed Phase I Submittals Due September 21, 2017 3:00 pm PST Identify Semi Finalists (Phase II) Week of October 16, 2017 Issue Semi Finalist Brief Week of October 16, 2017 Conduct Semi Finalist Meetings Week of October 30, 2017 Announce Finalists (Phase III) November 8, 2017 Conduct Briefing Day November 15, 2017 Conduct Work Sessions Week of December 11, 2017 Phase III Submittals Due January 23, 2018 3:00 pm PST Staff Plan/Compensation Proposals Due January 23, 2018 Conduct Finalists’ Presentations Week of January 29, 2018 Identify Apparent Successful Agency April/May 2018 Commission Approval to Award Contract May/June 2018

Effective Date of Contract June/July 2018

I. Verbal Communication

Any verbal communication with a Lottery employee concerning this RFP is not binding on the Lottery and will in no way alter a specification, term or condition of this RFP or of any resulting contract.

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J. Examination of All Requirements

Agencies are strongly encouraged to examine this document thoroughly and become familiar with the RFP’s requirements, including but not limited to those set forth in Exhibit A, Scope of Services, and Exhibit B, Draft Contract Terms and Conditions. Agencies’ proposals must be based solely on the information and materials contained in the RFP and any amendments thereto and on other written communications regarding the RFP that are issued by the Lottery contact person named above. Agencies must disregard all other information, including draft material, newspaper advertisements or articles, and verbal representations.

If an agency discovers an error in this RFP but fails to notify the Lottery of that error, the

agency submits a proposal at its own risk. If awarded the Contract, the agency will not be entitled to additional compensation or time due to the error or its subsequent correction.

The Lottery may, in its sole discretion, refuse to accept a proposal if it fails to furnish all required information or follow the format specified in this RFP.

K. Amendments to the RFP

The Lottery may cancel or amend this RFP at any time. Notice of amendment or cancellation will be sent to agencies that submitted a written Intent to Bid if the amendment or cancellation occurs prior to proposal submission, and to agencies that submitted a proposal if the amendment or cancellation occurs after proposal submission.

L. Written Questions

Questions regarding the content of this RFP must be submitted in writing via email or U.S. mail to the Lottery contact person specified above by the due date and time specified in the Projected Timetable. It is the agency’s sole responsibility to verify receipt of submitted questions. The Lottery may, in its sole discretion, respond to written questions received after the specified due date and time. Questions and responses will be provided to firms that submitted a written Intent to Bid and will also be posted on the Lottery’s website at www.calottery.com/Vendor.

M. Written Intent to Bid

Interested agencies must submit an Intent to Bid in writing via email or U.S. mail to the Lottery contact person by the date and time specified in the Projected Timetable in order to receive direct communications from the Lottery about this RFP.

The written Intent to Bid must include the agency contact person’s name, email address, mailing address, telephone number, and fax number (if applicable).

If a written Intent to Bid is not sent, a proposal may still be submitted. However, RFP notices and amendments issued by the Lottery will only be sent directly to agencies with a written Intent to Bid on file. After the proposal due date, only agencies that have submitted proposal packages in accordance with Section II, Proposal

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Requirements, and Section IV, Proposal Packaging and Delivery, to the Lottery contact person specified in Item G, will receive direct RFP communication and notices.

All interested parties may access such notices and amendments on the Lottery’s website at www.calottery.com/Vendor.

N. Property of the Lottery

All proposals become the property of the Lottery upon receipt and will not be returned to bidding agencies.

O. Proposals are Public Records

Pursuant to the California Public Records Act, California Government Code §§ 6250 et seq., all data, materials, information, and documents submitted to the Lottery by an agency may be incorporated into a publicly-available contract and may otherwise be subject to disclosure upon request by competitors and members of the public after the apparent successful bidder has been announced. The Lottery will process all Public Records Act requests in accordance with the laws of the State of California. An agency’s labeling of any proposal materials as “confidential” or otherwise exempt from disclosure is not binding on the Lottery, and the Lottery will not be liable to the agency or to any other person or entity for disclosing information as required by law.

P. Acceptance Period As a condition of submission, each agency’s proposal constitutes an unconditional offer

to the Lottery and is irrevocable for 180 days from the date submissions are due. Q. Conditions of Submission

Responses to the RFP and any subsequent presentations must be submitted with the most favorable terms the agency can offer. Agencies will be allowed to withdraw their responses only when a written request for withdrawal is actually received by the Lottery prior to the deadline for final bid submission. Requests for bid withdrawal must be filed in the same manner as proposals. After the submission deadline, agencies cannot replace, change, or modify their proposals in any way except as specified in this RFP or a subsequent amendment to this RFP.

R. Nonmaterial Deviation The Lottery may waive any deviation in a proposal that the Lottery determines to be

nonmaterial. The Lottery’s waiver of a nonmaterial deviation in no way modifies the RFP’s requirements or excuses agencies from full compliance with the Contract’s requirements.

S. Rejection of Proposals The Lottery reserves the right to reject any or all responses to this RFP. The Lottery may

reject any response that is conditional, contains additions not called for, is incomplete, contains erasures or irregularities of any kind, or contains material deviations. Any

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provisions of this RFP that are defined as requirements will be considered mandatory. In the interest of promoting competition, the Lottery may allow an agency to correct an inaccuracy in its proposal. If all agencies fail to meet one or more of the mandatory requirements, the Lottery reserves the right to continue evaluation of the proposals and to select the response that most closely meets the requirements specified in this RFP.

T. Contract Execution The Lottery Director or designee will make the final determination of contract award,

subject to California Lottery Commission approval if applicable. In making this determination, the Lottery Director or designee may be assisted by an Evaluation Committee.

The Lottery, in its sole discretion, may treat failure or refusal by the intended contract

awardee to begin performance within ten state working days of contract execution as repudiation of the contract. The Lottery may then either (1) select another proposal which conforms to the requirements of this RFP and represents, in the Lottery’s sole discretion, the best value; or (2) reject all proposals. The Lottery may also seek compensation for any damages associated with repudiation of the contract.

The Lottery reserves the right to cancel all elements of this solicitation or rescind the

announced award at any time before execution of the contract. Issuance of this RFP does not constitute a commitment by the Lottery to award a contract.

U. Hiring of Lottery Personnel At all times during the proposal evaluation period and continuing through contract award

or rejection of all proposals, agencies are prohibited from officially or unofficially making any employment offer or proposing any business arrangement whatsoever to any Lottery employee involved in the evaluation of proposals. An agency making such an offer or proposition will be disqualified from further consideration.

V. Governing Law and Regulations The Lottery’s governing law and regulations, including the California State Lottery Act and

the Lottery’s procedures for procurement of goods and services, are available on the Lottery’s website (www.calottery.com). It is each agency’s responsibility to be familiar with these laws and regulations.

W. Joint Proposals/Joint Ventures The Lottery will accept joint proposals in response to this RFP. A joint proposal (which is

defined as two or more independent agencies offering one proposal) that results in the award of a contract will be deemed one indivisible contract. Each agency will be jointly and severally liable for the performance of the entire contract.

The joint agencies must designate in their proposal a single person authorized to represent the joint ventures in all matters relating to the contract. If a joint proposal is

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being submitted, at least one of the independent agencies must meet all of the Minimum Agency Qualifications listed in Item F.

II. PROPOSAL REQUIREMENTS

Proposals submitted in response to this RFP must comply with the requirements of this section. Failure to complete and submit the information listed in this section in the specified format may result in disqualification of the agency’s proposal. Submittals required in written format must be organized in the same order and with the same lettering/numbering and format as shown in the following sections and subsections. Written submittals must be submitted in a 3-ring binder, one sided or double-sided on 8 ½ x 11-inch paper, using at least 12-point font. Tables, graphics, exhibits, inserts, and attachments must be submitted in a font size no smaller than 9 points. Each page must be consecutively numbered with sections clearly marked or labeled. The original submittal must be marked "Original" and have original signatures. Attachments and/or forms that require a signature must be signed in ink (preferably in a color other than black) by a person who is authorized to bind the proposing firm. Submittals required on compact disc (CD) or flash drive must be compatible with Microsoft Office 2016 Suite and Adobe Acrobat Reader X (v10.1.16) and must be organized in the format described in this section. In order for the Lottery to award a contract, agencies’ proposals must at a minimum, be fully responsive to the specific requirements stated in this RFP. Agencies must identify any requirements of this RFP they cannot satisfy.

A. Phase I Submittals and Evaluation Criteria

Agencies must not alter the Lottery’s Phase I submittal forms. Any change made to the forms, including but not limited to exceptions, deletions, and additions, may be the basis for disqualification of an agency’s proposal. Agencies must complete and submit the following as detailed below: 1. Introduction Letter 2. Attachment 1, Agency Fact Sheet 3. Agency Profile 4. Two Case Histories 5. Two Media Case Histories 6. Attachment 2, Certification 7. Attachment 3, Guaranty

1. Introduction Letter

Agencies must submit an introduction letter in written and CD/flash drive format, indicating that they are responding to the RFP and that all of the RFP requirements have been met. The letter must be signed by a representative identified in Attachment

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2, Certification, as legally authorized to contractually bind the agency. The introduction letter must confirm the agency’s qualifications and interest in participating in this solicitation. The introduction letter must explain the following:

a. The basis for the agency’s interest in the Lottery’s business; b. The agency’s particular strengths with respect to the basic qualifications as well

as the Lottery’s wants, needs, and expectations; c. Agency positioning and vision: How does the agency differ from competing

agencies? What is the agency’s vision and where/what will it be doing five years from now? What is the agency’s overall philosophy or credo?;

d. Integrated digital approach: Please indicate (at a high level, and as appropriate) how the agency integrates digital work, and multiple communications channels, into its approach;

e. Work process: Describe the agency’s work process (if it uses a specific discipline), and any particular practices it employs that help produce consistently-effective advertising. Describe the agency’s vision of the Lottery’s role in its strategic and creative development processes;

f. The backgrounds of the agency’s key personnel, if identified, who will be assigned to handle this account;

g. A summary of the key contributions the agency believes it can bring to the Lottery’s advertising and marketing communications efforts; and

h. Contact information, including name, phone number, and email address, for the representative who will be the main contact person between the agency and the Lottery during the evaluation process. This contact person will also be identified in Attachment 2, Certification.

If the agency is submitting a joint proposal, the agency must submit a letter with all of

the information required for each of the entities comprising the joint venture. The letter must state the name of the representative who is legally authorized to contractually bind the joint venture and must be accompanied by proof of authorization from each entity (e.g., by-laws, minutes or resolution of board of directors of corporation or association, written trust instrument, partnership agreement, etc.).

Agency must disclose any potential, actual or apparent conflicts of interest that may

arise between any current client and the Lottery. Because of the complexities involved in defining conflicts of interest, please identify any potential conflicts, and the Lottery will make a final determination as to whether a disqualifying conflict exists.

2. Agency Fact Sheet (Attachment 1)

Agency Fact Sheet, Attachment 1, must be completed by each agency and included in its Phase I Submittal package in written and CD/flash drive format. If the agency is submitting a joint proposal, each agency comprising the joint venture must complete and submit an Agency Fact Sheet.

3. Agency Profile Agencies must submit an agency profile that includes a recent video creative, not to exceed 10 minutes in length, on a menu formatted and narrated Digital Video Disc

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(DVD) and a written version of the DVD content, on CD/flash drive format for the Lottery’s reference. Think of this as a story about the agency as illustrated by its work, which is not limited to TV. However, please ensure sufficient video commercial samples run in their entirety. Context is the key to helping the Lottery better assess the agency’s relevant work and experience.

4. Two Case Histories Agencies must submit two case histories of recent and relevant campaign work on a menu-formatted and narrated DVD, and a written version of the DVD content on CD/flash drive format for the Lottery’s reference. If the agency has good examples of work that builds a brand and drives product sales at the same time, the Lottery would like to see them. Please include multiple creative elements from each campaign to demonstrate how the agency integrates a brand across an integrated toolbox that includes social and media components. Case histories may include visual representations of print, outdoor, collateral, or promotional material as well as any viral, non-traditional, or social media elements. Please include a succinct description or overview (for example objectives, strategy, consumer/creative insight, and results) for each ad or campaign and a notation of the timeframe in which the work ran. The succinct description must be included on both the DVD and in written format, not to exceed two pages in length for each campaign. Case histories must be from the office submitting the proposal.

5. Two Media Case Histories

Agencies must submit two media case histories on a menu-formatted and narrated DVD with subtitles, and a written version of the DVD content on CD/flash drive format for the Lottery’s reference. The first media case history must showcase the agency’s relevant media planning capabilities to demonstrate that the agency has the strategic and creative planning skills the Lottery seeks. The second media case history must demonstrate the agency’s buying and negotiating skills to showcase that the agency represents the best value proposal. In selecting the media case histories, please remember the Lottery expects media planning to align with creative strategy development and is looking for an agency that can leverage data and incorporate traditional, digital, and new solutions into its efforts. This will assist the Lottery in understanding how each agency uses research, data, and analytics to optimize the effectiveness of its work. In addition to the media case histories on DVD and CD/flash drive, agencies must include a written summary, not to exceed 2 pages in length, of the media objective, target market, consumer insights, strategy, and results for each campaign. Media case histories must be from the office submitting the proposal.

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Evaluation Criteria for Phase I Submittals 1-5 (listed in order of importance): ➢ Caliber of strategic thinking; ➢ Creativity and innovation; ➢ Quality of media capabilities (buying, planning, research, and analytics); ➢ Innovative integrated communications planning that drives sales; ➢ Best-in-class digital and social media; ➢ Agency positioning, vision, and philosophy; ➢ Innovative promotions and experiential marketing; ➢ Depth and breadth of agency’s organizational qualifications and

experience; ➢ Relevant experience with gaming, entertainment and/or low-cost

consumer goods; and ➢ Quality of client list.

6. Certification (Attachment 2)

Certification, Attachment 2, must be completed by each agency and included in its Phase I Submittal Package in written and CD/flash drive format.

7. Guaranty (Attachment 3) Guaranty, Attachment 3, must be completed by each agency and included in its Phase I Submittal Package in written and CD/flash drive format.

Evaluation Criteria for Phase I Submittals 6 and 7: Pass/Fail

B. Phase I Evaluation

Submission of the Introduction Letter, Agency Fact Sheet, Agency Profile, Case Histories, Media Case Histories, Certification, and Guaranty forms is mandatory. Failure to submit the information listed under Phase I Submittals and Evaluation Criteria may, at the sole discretion of the Lottery, result in the disqualification of the proposal. If all agencies fail to meet one or more of the Phase I Submittals, the Lottery reserves the right to continue evaluating the proposals. The Introduction Letter, Agency Fact Sheet, Agency Profile, Case Histories, and Media Case Histories will be further reviewed and evaluated by the Lottery Evaluation Team using the Rating Chart shown in Section III. After review and evaluation of the Phase I submittals, those agencies receiving a minimum overall rating of “Exceeds” will advance to Phase II as Semi-Finalists. Agencies receiving a minimum of “Meets” may, at the sole discretion of the Lottery Evaluation Team, advance to the Semi-Finalist phase.

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C. Phase II Semi-Finalist

The Lottery will identify Semi-Finalists, schedule Semi-Finalist meetings, and release the following: 1. Semi-Finalist Brief 2. Semi-Finalist Evaluation Criteria 3. Instructions for completing and submitting Phase III Submittals

D. Phase II Semi-Finalist Competition

Phase II of the RFP process will include face-to-face meetings between the Lottery Evaluation Team and the Semi-Finalists. The meetings will be scheduled by the Lottery and will take place at the agency’s office located in California.

The objective of these meetings is to give the Lottery Evaluation Team a sense of the agency that goes beyond the work and credentials that were evaluated in Phase I. The Lottery wants to meet the people that run the agency and the team that would lead the Lottery’s account. The Lottery Evaluation Team wants to assess the depth of the agency’s resources, measure its strategic “smarts,” and evaluate the intensity of the agency’s interest and commitment to the Lottery’s business.

E. Phase II Semi-Finalist Evaluation

The Semi-Finalist Competition will be reviewed and evaluated by the Lottery Evaluation Team using the Rating Chart shown in Section III. After review and evaluation of the Semi-Finalist Meetings, those agencies receiving a minimum overall rating of “Exceeds” will advance to Phase III as Finalists. Agencies receiving a minimum of “Meets” may, at the sole discretion of the Lottery Evaluation Team, advance to the Finalist phase.

F. Phase III Finalist Submittals

Upon identification of the Semi-Finalists the Lottery will provide specific instructions for submitting the forms listed under Phase III Submittals. Finalists will ensure Phase III Finalist Submittals are received at the Lottery’s headquarters on the date specified in Section I, H, Projected Timetable. Only agencies identified as Finalists will be required to submit the following Phase III Submittals:

1. Attachment 4, Disabled Veteran Business Enterprise Participation (if applicable) 2. Attachment 5, Small and Microbusiness Participation (if applicable) 3. Attachment 6, Major Agency Disclosure 1. Disabled Veteran Business Enterprise (DVBE) Participation (Attachment 4 –

Optional)

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If applicable, Finalists Bidders are required to complete and submit the forms contained in Attachment 4, Disabled Veteran Business Enterprise Participation.

2. Small and Microbusiness Participation (SMP) (Attachment 5 - Optional) Based upon the nature of the goods and services to be utilized under this solicitation

(as outlined in the Scope of Services, Exhibit A), the Lottery has set a Small and Microbusiness Participation goal of 25%, excluding media placement costs, for utilization of small or microbusinesses as subcontractors under the contract resulting from this solicitation. Only Finalists will have the option to participate in this program.

3. Major Agency Disclosure (Attachment 6) Finalists will be required to complete and submit forms in Attachment 6, Major Agency

Disclosure. Finalists will be required to disclose certain information pursuant to California Government Code section 8880.57. Any individual or entity in an agency’s organizational chain and any of the agency’s subcontractors may also be required to disclose similar information. The Lottery may refuse to enter into a contract based on the results of these disclosures, as provided in California Government Code section 8880.57.

In order to ensure integrity, security, and honesty in its operation, the Lottery will conduct a thorough background check of the Finalists. This may include fingerprinting and review of financial information. The Lottery may disqualify any Finalist if its related entities or their directors, officers, employees, or owners refuse to participate. The successful agency will be required to notify the Lottery of the identity of potential subcontractors and may be required to periodically update other disclosure requirements during the term of the contract. Note: The disclosures provided in these forms will be considered confidential.

G. Phase III Finalist Competition

The Lottery will identify the Finalists, schedule Briefing Day, Work Sessions and Finalist Presentations, and release the following: 1. Finalist Work Assignment 2. Request for Staff Plan and Compensation Proposal 3. Finalist Evaluation Criteria Finalist Work Assignment: In Phase III, Finalist agencies will be asked to complete and present, at their California office, a strategic, creative, and integrated work assignment including media and online components. At the beginning of the Finalist Phase, there will be a group briefing day for the agencies identified as Finalists. Following the group briefing, Finalist agencies will have an opportunity to present questions to the Lottery staff.

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Finalist Request for Staff Plans and Compensation Proposals: In Phase III, each Finalist will receive a packet outlining the proposed Sample Description of Work (for bidding purposes only) for the Lottery account. The packet will include an excel spreadsheet and instructions for organizing the proposed staff plan and corresponding cost information. The objective of this portion of the Finalist Phase is to evaluate Finalists’ anticipated staff proposal and proposed compensation on both a stand-alone and comparative basis to facilitate an “agency-to-agency” evaluation. The Lottery prefers an all-inclusive, labor-based Annual Agency Fee arrangement where media and production costs would be billed at net. The Annual Agency Fee will be paid in 12 equal monthly installments and prorated for partial service months.

H. Phase III Finalist Evaluation The Finalist Competition will be reviewed and evaluated by the Lottery Evaluation Team using the Rating Chart shown in Section III.

III. PROPOSAL EVALUATION PROCESS

A. Ratings

The Lottery will fairly and impartially evaluate proposals received in response to this RFP. Proposals may be evaluated in comparison with other submitted proposals. Clarification may be requested from participating agencies during any phase of the evaluation process. All materials and/or portions not identified as pass/fail will be evaluated using the Rating Chart shown below, in accordance with the provisions stated in this RFP.

Rating

Definition

Superior

Proposal exceptionally exceeds performance or capability requirements; proposal demonstrates extraordinary strengths that will more than significantly benefit the Lottery.

Significantly Exceeds

Proposal significantly exceeds performance or capability requirements; proposal demonstrates exceptional strengths that will significantly benefit the Lottery.

Exceeds

Proposal exceeds performance or capability requirements; proposal has one or more strengths that will benefit the Lottery.

Meets Meets specified minimum performance or capability requirements necessary for acceptable contract performance.

Meets with Exceptions

Proposal demonstrates weak performance or capability standards necessary for minimum contract performance; proposal has one or more weaknesses that offset any strengths.

Does Not Meet

Fails to meet specified minimum performance or capability requirements. Proposals with an unacceptable rating are not awardable.

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B. Best Value Analysis If the Lottery elects to award a contract, such contract will be awarded to the agency that submits the best value proposal. The best value proposal will be the proposal that provides maximum benefits to the Lottery in the areas of security, competence, experience, qualifications, performance, and price. The proposal with the lowest price may not be selected if a higher-priced proposal provides greater overall benefits to the Lottery. As part of the best value evaluation process, the Lottery may award a contract based on the proposals submitted, or establish a competitive range and hold discussions with each agency in the competitive range. The competitive range will be comprised of the most highly-rated proposals consistent with the need for an efficient competition. If discussions are conducted, each agency will be given the opportunity to revise its proposal only in those specific areas identified by the Lottery. Discussions may include bargaining. Bargaining includes persuasion, alteration of assumptions and positions, and give-and-take, and may apply to price, technical requirements, type of contract, or other terms of a proposed contract. The Lottery may discuss with each agency in the competitive range, weaknesses, deficiencies, and other areas of concern in its proposal such as price, technical approach, and other terms that, if altered, may materially-enhance the proposal’s potential for award. The scope and extent of discussions are matters solely within the Lottery’s discretion.

IV. Phase I Submittals Packaging and Delivery

A. Packaging Proposals must be submitted in sealed packages as addressed below and clearly identify

the agency making the submission. Within the sealed packages, agencies will include two separately sealed packages clearly identifying the contents and agency’s name and address:

▪ Package 1: Agencies will submit one original and four copies of:

➢ Introduction Letter ➢ Attachment 1, Agency Fact Sheet ➢ Attachment 2, Certification ➢ Attachment 3, Guaranty

▪ Package 2: Agencies will submit a copy of the following submittals on DVD and CD:

➢ Agency Profile ➢ Two Case Histories ➢ Two Media Case Histories Also include five copies each of the written summaries for Agency Profile, Case History and Media Case History.

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Agencies must also include one CD or flash drive containing a copy of all written requested submittals listed above.

B. Delivery

Proposal packages must be received by the Lottery no later than 3 p.m. PT on September 21, 2017. Fax or electronic transmissions will not be accepted. Mail or deliver proposal packages to:

California State Lottery Contract Development Services 700 North 10th Street

Sacramento, California 95811-0393 Attention: John Muise

Response to RFP #50077 DO NOT OPEN IN MAILROOM

Postmark date will not constitute timely delivery. Proposal packages received after the above date and time will not be considered. Agencies are solely responsible for ensuring timely receipt of their proposal packages.

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EXHIBIT A SCOPE OF SERVICES

Agency is responsible for the following:

• Sharing responsibility for planning, coordinating, integrating, and executing the Lottery’s overall marketing plan and specific portions of the Lottery's annual advertising plan.

• Assisting in overall marketing analysis, strategy development, and positioning of the Lottery and its products.

• At the Lottery’s direction, facilitating collaboration among Lottery staff, multi-cultural advertising agencies, and other marketing contractors to provide integration of advertising and marketing plans.

• Creating and producing marketing and advertising supporting the Lottery's new and existing products and programs.

• Developing media plans and purchasing television, radio, print, outdoor, digital, social, and any new media vehicle that assists in marketing Lottery products.

• Developing digital media strategies including robust social media and search engine strategy and digital media negotiation, buying, and placement.

• Providing assistance with long-range marketing plans and specialized programs.

• Managing and working with the Lottery’s econometrics modeling tool to optimize campaign results for maximum media ROI.

• Providing a post-buy analysis of all media buys.

• Developing, managing, and facilitating Lottery market research studies. Agency may be required to:

• Directly contract with television stations in California designated market areas and for the airing of Lottery programs.

• Provide assistance with syndication activities.

• Develop, design, and provide in-store communications.

• Provide PR programs integrating media relations, crisis communications, and cross-cultural outreach.

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EXHIBIT B DRAFT CONTRACT TERMS AND CONDITIONS

1. GENERAL PROVISIONS 1.1 Parties and Authorization The parties to this contract (Contract) are the California State Lottery (Lottery) and

__________ (Agency). Each party acknowledges that it has read the Contract, understands it, and agrees to be bound by its terms. The person signing this Contract on behalf of Agency further warrants that he/she is an agent of Agency and is duly authorized to enter into this Agency on its behalf.

1.2 Initial Contract Term

The initial Contract Term is five years. 1.3 Option to Extend

The Lottery may unilaterally extend the Contract Term under the same terms and conditions, including pricing, for up to two, one-year periods (the “Option Period”).

1.4 Emergency Extended Service

In the event of an urgent and compelling need, Agency agrees to provide up to nine months of additional emergency extended services at the Lottery’s request, under the same terms and conditions, including pricing, upon expiration of the Contract term and any extensions.

1.5 Transitional Service for Agency Change

The Lottery may require continuation of the Contract under the same terms and conditions, upon 30 days’ notice, for multiple 90-day periods to facilitate transition to a new agency. Agency agrees to maintain the service in a state of readiness for any such periods after the completion of the Contract.

1.6 Full Force and Effect This Contract is of no force and effect until it is signed by all parties and all approvals are

secured ("execution"). Agency operates at its own risk if it commences performance before execution. Each party’s signature hereon constitutes a representation that all necessary approvals have been obtained by that party.

1.7 Amendment

The parties may amend this Contract by mutual written consent. No alteration or variation of the terms of this Contract will be valid or binding unless amended pursuant to this

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section, and no oral understanding or agreement not incorporated into the Contract is binding on the parties.

1.8 Agency Consideration

As consideration for the compensation provided to Agency under this Contract, Agency agrees to perform all services and to fulfill all responsibilities as duly authorized by the Lottery and as detailed in Exhibit A, Scope of Services.

2. RELATIONSHIP AND AUTHORITY 2.1 Governing Law

This Contract is governed by and will be interpreted in accordance with California law. Agency acknowledges that the California State Lottery Commission (Commission) has the sole authority to exercise all powers necessary to effectuate the Lottery’s purpose, and that the Commission retains all such authority under the Contract, but only to the extent such audits and oversight, in the auditor’s opinion, do not violate applicable professional standards or undermine the integrity of the audit. Agency understands and agrees that its performance is subject to Lottery audit and oversight. Subject to these limitations, Agency has the power, authority, and discretion to act as may be necessary or desirable to properly, efficiently, fully, and completely perform the Contract.

2.2 Jurisdiction and Venue

The proposal process, the award procedure, and any contract resulting from the solicitation will be governed by and interpreted in accordance with this section. By signing the Contract, Agency acknowledges and specifically agrees that the jurisdiction for any action hereunder will be the Superior Court, State of California, and the venue for any action hereunder will be Sacramento County. As consideration for entering into the Contract, Agency waives access to any other court that may have concurrent jurisdiction inside or outside of California and also agrees to exhaust all contractual and administrative remedies before instituting litigation relating to the Contract.

3. THE PARTIES’ OBLIGATIONS 3.1 Contract Managers

The Lottery and Agency Contract Managers are responsible for ensuring compliance with the terms and conditions of the Contract and, unless otherwise specified in the Contract, will have the authority to act for and bind their respective party in connection with the Contract. Any change in Agency’s Contract Manager shall be subject to Lottery approval.

3.2 Key Personnel

A. The personnel specifically identified in Agency’s Staff Plan and Compensation Proposal Worksheet are considered essential to the work being performed under the Contract. Before removing, replacing, or diverting any of the listed or specified personnel, Agency shall: (1) notify the Lottery’s Contract Manager in writing; and

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(2) submit justification (including proposed substitutions) in sufficient detail to permit evaluation of the impact on the Contract.

B. Except for changes as a result of the departure of personnel from the Agency, the

Agency may not remove, replace or divert personnel listed in Agency’s Staff Plan and Compensation Proposal Worksheet without the Lottery Contract Manager's consent.

3.3 Prior Lottery Approval

The Lottery has no liability for payment for any work that Agency commences without prior approval from the Lottery’s Contract Manager.

3.4 Business and Professional Licenses

Agency must be licensed to do business in California and must obtain, at Agency’s expense, all licenses and permits required by law for accomplishing any work required in connection with this Contract. Agency must, upon request, provide the Lottery with copies of all required licenses/permits. In the event any licenses or permits expire at any time during the term of this Contract, Agency agrees to renew and provide the Lottery, upon request, with copies of the renewed licenses or permits.

3.5 Office in California

Agency must maintain an office in California for the entirety of the Contract term. 3.6 Confidentiality

A. Agency must keep confidential all information and materials related to the Contract

and/or obtained through the course of work and must not disclose any such

information or materials to third parties unless such disclosure is approved in

writing by the Lottery, specifically required by court subpoena or order, or

applicable professional standards, or otherwise specifically permitted by the

Contract.

B. The California Public Records Act requires public disclosure, upon request, of

documents that pertain to state business. Exceptions to this requirement are

limited. The Lottery may, in its discretion, withhold Agency material specifically

and conspicuously identified by Agency as confidential if Agency has provided

sufficient legal justification for doing so. The Lottery is under no obligation to inform

Agency that a request for information has been made or that documents are being

released. However, the Lottery may, in its discretion, allow Agency the opportunity

to provide the Lottery with further legal justification for withholding specific

information. Unless it receives a court order to the contrary, the Lottery retains the

right to determine whether an exemption to the Public Records Act applies to

Agency information being sought. Under no circumstance will the Lottery be liable

to Agency or to any other person or entity for disclosing any Agency material,

regardless of its designation by Agency as trade secret or confidential information.

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3.7 News Releases Agency must not issue news releases or make any statement to the media pertaining to

this Contract without the prior written approval of the Lottery, and then only in cooperation with the Lottery.

3.8 Fiduciary Duty

Unless otherwise expressly agreed in writing, Agency will always act as a fiduciary and in the best interest of the Lottery.

3.9 Rebates and Incentives

A. Full Disclosure

Agency and Holding Company Members (defined as any company created to buy, possess, and control shares of other companies, and all of its affiliates, as well as any person who has a financial interest or investment in any of the foregoing) must be transparent and fully disclose to the Lottery the flow of the Lottery’s funds entrusted to Agency, and any rebates and incentives (defined as any and all third party payments including cash rebates or other incentives) received by Agency and Holding Company Members; Agency volume discounts or compensation from media buys; discounted or unpaid media space or inventory; volume, early payment or other discounts; commissions; compensation; refunds or bonuses; bonus inventory, free or discounted media, sponsorship or promotional space; consulting or research agreements; service level agreements or any other source of financial or other benefit receivable directly or indirectly by Agency and Holding Company Members from third parties that are either directly or indirectly related to: Lottery’s media placements (which means all advertising, sponsorship or promotional media purchased by Agency, either directly or indirectly from third parties or Holding Company Members, in connection with the provision of services under this Contract; payments for media placements may take any form, including cash, credits, or the transfer of funds by digital means).

B. No Direct or Indirect Benefits

Agency and Holding Company Members must at no time, without disclosure to and written approval by the Lottery, receive or retain any rebates and incentives or other benefits of any value from third parties, as a direct or indirect result of the Lottery’s spending under this Contract.

C. Reporting

Agency must provide to the Lottery, when requested by the Lottery, throughout the Contract Term and any extension thereof a full and accurate report of: 1. Each rate card and terms of payment offered to Agency or Holding Company

Members between the Agency or Holding Company Members (before any rebates

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and incentives have been applied) and any third party for any media placements made by Agency or Holding Company Members on behalf of the Lottery;

2. The gross amounts of rebates and incentives Agency or any Holding Company

Member directly or indirectly receives or is entitled to receive in sufficient detail to permit an accurate assessment by the Lottery of the rebates and incentives due to the Lottery;

3. Any actions by the Lottery, Agency, or Holding Company Members that are

required in order for the rebates and incentives to accrue; and

4. Any early payment discounts received by or eligible to be received by Agency or Holding Company Members from a third party. Lottery is entitled to receive any early payment discounts received by Agency or Holding Company Member on account of Lottery’s media placements, unless the Lottery expressly chooses not to receive such discounts or Agency notifies Lottery with reasonable advanced notice of the deadline to qualify for such early payment discounts and Lottery fails to pay Agency for such media placement within the qualification period to receive such discounts.

D. Return of Rebates and Incentives to Lottery

After the Lottery determines that rebates and incentives are to be refunded to the Lottery, the Lottery will notify the Agency of the amount that must be refunded to the Lottery (assessment). The Lottery will send the assessment notice to the Agency by certified mail, return receipt requested, or by any other method that provides evidence of receipt. At the Lottery’s discretion, the assessment notice may direct payment of the assessment by the Agency. If payment is so directed, the Agency must pay the assessment within 30 days from receipt of the assessment notice. Any assessments may also be collected, at the Lottery’s discretion, by withholding the funds from any payment(s) due the Agency after the date the assessment is determined.

E. Available Discounted Media Placements

Agency must keep Lottery fully informed of any relevant media placements available to the Lottery on account of Agency’s dealings with third parties together with any dates by which such discounted media space must be used by the Lottery in order to take advantage of the discount.

4.0 GENERAL WARRANTIES AND REPRESENTATIONS

Agency warrants and represents the following:

A. Authority

Agency is authorized and prepared to enter into and fully perform the terms and conditions of the Contract. Agency has secured, or will have secured, at its own

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expense, and will maintain throughout the Contract term, all necessary rights, clearances, permits, governmental approvals, and licenses with respect to all material and elements embodied in, or used in connection with, the performance of the Contract;

B. Compliance with Law

Agency will comply with all federal, state, and local laws, ordinances, rules, and regulations applicable to its activities and obligations under the Contract;

C. No Infringement

The goods and services provided do not and will not, to the best of Agency’s knowledge, infringe any copyright, trademark, or other third-party owned intellectual property;

D. Performance Standards

All services that Agency provides under the Contract will be performed in a prompt, competent manner by properly trained individuals in accordance with applicable professional standards of Agency’s industry.

E. Minimum Staffing Levels

Agency will maintain the minimum staffing levels set forth in its Staff Plan and Compensation Proposal Worksheet.

5.0 FISCAL PROVISIONS 5.1 Reduction of Funds

The obligations of the parties under this Contract are subject to the availability of funds appropriated by the Commission.

5.2 Payment

A. Agency shall be paid in accordance with this provision and the Staff Plan and Compensation Proposal Worksheet. Billings will be done on a project-by-project basis and will require the submission of an estimate prior to the start of any work. The estimate number to be used to track each project will be issued by the Lottery. Contractor shall comply with Exhibit C, Cost Audit guidelines.

B. Annual Agency Fee Lottery will pay compensation to Agency in the form of an all-inclusive, labor-based Annual Agency fee arrangement (Fee). The Fee will be estimated for each fiscal year based on agreed-upon deliverables set forth in the Key Marketing Initiative Deliverables Worksheet. The Fee will be set forth in the Staff Plan and Compensation Proposal Worksheet, the parties’ agreed-upon plan for the fiscal year, using the following method of calculation:

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Grand Total of Estimated Direct Labor Cost + Overhead Mark-Up = Total Cost

Total Cost + Profit Mark-Up = Annual Agency Fee

With respect to any additional yearly deliverables not contemplated in Attachment 2, further compensation will be negotiated and agreed to by the parties, as necessary. Any agreement for additional yearly deliverables will be acknowledged in a writing signed by the parties. Such writing will identify each additional yearly deliverable and the amount of compensation to be paid.

C. Blended Hourly Rate

The blended hourly rate is the Fee (including overhead mark-up and profit mark-up) divided by the total hours set forth in the Plan.

D. Payment

The agreed-upon Fee and compensation for any additional yearly deliverables will be paid in arrears in 12 monthly installments and prorated for partial service months.

E. Specialized Programs

At the Contract Manager’s discretion, Agency may be required to provide as-needed services in support of specialized programs that are within the Contract’s scope of services but are not addressed in the current Staff Plan and Compensation Proposal Worksheet. Compensation for specialized program services will be in addition to the Fee and will be paid using an agreed-upon billing rate for each proposed specialized program service. With prior approval by the Contract Manager or designee, a portion of a project may be “pre-billed.” Documentation shall verify that no more than 50% of the specialized service estimate with “pre-bill” backup, shall be billed prior to service. Documentation shall verify that the remaining amount of the estimate was invoiced after service was completed and shall include backup for the entire specialized program. All specialized program services will require submission of an estimate prior to the start of any work and must be approved in writing by the Lottery Contract Manager or designee.

5.3 Full Compensation

The compensation to be paid to Agency, except as otherwise provided herein, is in consideration for all of Agency's services and administrative expenses, including all taxes.

5.4 Invoicing

Agency shall submit invoices for each installment of the Fee in triplicate on or about the 15th day of the month noting the Contract number and listing the services rendered. Agency shall submit invoices for the expenses incurred by Agency on the Lottery’s behalf (including, but not limited to, production) in triplicate in arrears on or about the first and 15th of the month noting the PO number and listing the services rendered, goods

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provided, and reimbursement claimed. The Lottery Contract Manager will review each invoice for completeness and accuracy. Unless disputed, payment will be made as approved by the Lottery Contract Manager within 45 days of receipt of the invoice. Contractor shall comply with Exhibit C, Cost Audit Guidelines. Invoices shall be submitted to:

California State Lottery Accounting Operations and Tax Bureau P.O. Box 778 Sacramento, CA 95812-0778

Documents necessary to support and substantiate each invoice shall accompany the invoice. Production invoices shall be submitted within 60 days from date service was provided. Media invoices shall be submitted within 60 days of the completion of the flight. After all invoices have been submitted for both production and media, Agency shall provide a closeout report detailing billing history and actual dollars spent per job. If no final invoice is received within 180 calendar days after the termination of the Contract or expiration of the Contract by its own terms, Agency waives the right to receive any further payments under this Contract.

5.5 As-Needed Changes

On an as-needed basis, upon request of either party, or if there are changes to the deliverables, the parties shall in good faith discuss revisions to the Staff Plan and Compensation Proposal Worksheet. The current fiscal year Staff Plan and Compensation Proposal Worksheet shall remain in full force and effect until such time as a revised Staff Plan and Compensation Proposal Worksheet is agreed upon by the parties in writing.

5.6 Staff Plan and Compensation Proposal Worksheet Update

Prior to the end of each fiscal year during the term of this Contract, the parties agree to discuss, in good faith, revisions to the Staff Plan and Compensation Proposal Worksheet for the next year including negotiation of the Fee, based on the Lottery’s Key Marketing Initiative Deliverables Worksheet. However, in no event may the aggregate direct labor cost used to derive the Fee increase by more than 5 percent per year; nor may the percentage of overhead mark-up or percentage profit mark-up increase from the initial Staff Plan and Compensation Proposal Worksheet.

When agreed upon by the parties and formalized in writing, an updated Staff Plan and Compensation Proposal Worksheet and Key Marketing Initiative Deliverables Worksheet will be added to the Contract as Attachments 1 and 2 for each successive fiscal year. For each fiscal year, the Staff Plan and Compensation Proposal Worksheet then in effect shall remain in full force and effect until such time as a revised Staff Plan and Compensation Proposal Worksheet is agreed upon by the parties in writing.

5.7 Notice of Monies Due

The Lottery will notify Agency in writing when and if any monies are due the Lottery. Any monies Agency owes the Lottery must be paid to the Lottery within 30 days after the

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postmark of the notice of the amount due or the amount due will be deducted from compensation otherwise due Agency by the Lottery.

5.8 Tie-In Promotion

The parties agree that it is in the Lottery’s best interest to pay the lowest price for media. In that regard, if the Lottery directly negotiates a tie-in promotion with a third party, depending on that party’s contractual obligations with its own advertising Agency and that Agency’s cost, and if Agency’s cost is the lowest, the Lottery may recommend to the tie-in partner that Agency buy the media. The Lottery has final approval of media buys.

5.9 Tax Reporting

Agency is notified that Internal Revenue Code section 6041 and California Revenue and Taxation Code section 18646 require the Lottery to report certain payments. No claims for payment will be processed by the Lottery without the necessary information specified therein. Agency agrees to abide by these reporting requirements and to provide that information to the Lottery.

5.10 Withholds

A. The Lottery has the right to withhold or delay payments to Agency, in whole or in part, if Agency fails to perform its material obligations under the Contract.

B. Should Agency cure the performance failure giving rise to the withheld or delayed

payment, the Lottery will review the matter with Agency and determine, within its discretion, whether the Lottery will continue to withhold payment or otherwise offset money due Agency.

6.0 LOSS PREVENTION

A. Agency must acquire and maintain insurance policies, bonds, and securities

(Coverage) and indemnify the Lottery as set forth herein. The required Coverage

must remain in force throughout the term of the Contract and any extensions

thereto, and copies certificates of insurance, must be provided to the Lottery upon

request. Proof of Coverage, including certificates of insurance for each required

policy, must be provided to the Lottery within ten calendar days after execution of

the Contract. In addition, proof of Coverage for renewals must be forwarded to the

Lottery within ten calendar days of Coverage expiration. Each insurance policy

must be issued by companies that are rated A-minus or better by the AM Best

Company or meet the approval of the Lottery. If Agency’s Coverage provider

cancels any required policy or other Coverage, Agency must immediately notify the

Lottery and obtain replacement Coverage. Failure to provide and maintain any

required Coverage may result in termination of the Contract.

B. Agency may not perform services or incur expenses until proof of Coverage,

including certificates of insurance for the required policies, are received by the

Lottery.

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C. Agency may request adjustment to Coverage requirements by submitting a request

in writing to the Lottery Contract Manager. Agency may not adjust Coverage

amounts or insurance liability limits below the amounts listed in this Contract without

prior written approval of the Lottery.

6.1 Workers’ Compensation

Agency must maintain Workers’ Compensation insurance for all of its employees who will be engaged in the performance of the Contract pursuant to the requirements of the California Labor Code.

6.2 Insurance

A. Commercial General Liability

Agency shall maintain Commercial General Liability insurance with limits of at least $2,000,000 for any one person and $4,000,000 for any one occurrence for death or bodily injury, and $2,000,000 for any one occurrence for property damage. The policy shall include, but not be limited to, coverage for liabilities for premises, operations, products, advertising injury, and subcontractor operations. The policy must include the Lottery, Commission members, and Lottery officers and employees as additional insured, insofar as operations under the Contract are concerned.

B. Professional Liability/Errors & Omissions

The Contractor will maintain professional liability or errors & omissions Insurance covering any damages caused in connection with this Contract by the Contractor’s error, omission, or negligent act. Limits of not less than $1,000,000 must be provided.

6.3 Indemnification

A. Agency shall indemnify and hold harmless, at Agency’s expense, the State of California, the California State Lottery, the California State Lottery Commission, and all California State Lottery officers and employees and their respective successors, heirs, representatives, administrators and assigns, from and against any and all responsibilities, suits, judgments, awards, costs, damages, claims, demands, actions, losses, settlements, costs and expenses (including attorneys’ fees and expenses), expenses or liabilities of every nature, threatened or brought against, sustained or incurred by any of them, whether joint, several, or individual (hereafter referred to as “claims”) resulting or arising from or in any way connected with (1) any act or omission of Agency or any of its officers, employees, subcontractors, or agents, negligent, unauthorized, intentional, or otherwise; (2) any infringing use of third-party intellectual property; (3) the inaccuracy or breach of any covenants, representations and warranties made by Agency as they occur; and (4) the breach of a term or condition of the Contract by Agency. The provisions of this Section shall survive the termination or expiration of the Contract.

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B. Agency shall provide the Lottery’s Contract Manager with immediate written notice of any action or suit threatened or filed against Agency that is related in any way to the Contract.

C. The indemnities set forth herein are in addition to, and not in lieu of, any other

indemnities provided hereunder or by law. D. If the use of any element of advertising or other creative works developed,

provided, used, or prepared by Agency is enjoined as a result of any such action or proceeding, Agency shall, at its own expense and at the Lottery’s option:

1. Procure for the Lottery the right to continue to use said element; 2. Replace said element with a comparable element which is non-infringing or

is not a trade secret; 3. Modify said element so it becomes non-infringing or no longer is such a

trade secret; or 4. Remove said element and pay to the Lottery any damages incurred by the

Lottery as a result of the infringement. 6.4 Clearances, Releases, Waivers, Contracts and Licenses

Agency is solely responsible for securing, during the preparation of advertising materials and prior to the execution, printing and/or airing of any advertising materials, any necessary searches, rights, clearances, releases, waivers, contracts and/or licenses with respect to any and all elements used in the materials, including but not limited to third-party intellectual property, names, likenesses, testimonials, scripts, musical compositions, creative and/or similar materials, elements, or rights embodied or to be embodied in materials developed, provided, used, or prepared by Agency under this Contract. Agency is solely responsible for obtaining trademark, trade name, service mark, house mark, copyright, slogan and/or logo (collectively referred as “mark”) searches on marks which are to be used as an element in a campaign theme, slogan, logo, or other advertising or promotional purpose by the Lottery. These responsibilities continue throughout the Contract term and any extension. Agency shall provide the Lottery with a written assessment of all searches. The Lottery shall advise Agency of its decision on whether or not to use the mark. Agency shall deliver to Lottery, immediately upon request, written documentation (a) evidencing Agency’s exclusive ownership rights or (b) its licensed rights as set forth above.

6.5 Media Liability

Agency must include a clause in its media purchase contracts providing that Agency, not the Lottery, will be solely responsible for payment of all media invoices.

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6.6 Nonexclusive Rights

Agency understands and agrees that the Lottery does not grant Agency exclusive rights to provide to Lottery those services listed in Exhibit A, Scope of Services, during the period covered by this Contract or any extension thereto. The Lottery reserves the right, during the Contract term, to acquire these services through another Agency. The Lottery’s good faith exercise of this right will not constitute a breach of the Contract.

7.0 CONTRACT OVERSIGHT 7.1 Background Investigations and Approval of Agency Staffing

The Lottery may investigate Agency, its officers, directors, principals, investors, owners, employees or other associates, and/or the officers, directors, principals, investors, owners, employees, and other associates of Agency's parent entity, subsidiaries, and/or subcontractors at any time during the life of the Contract, at the discretion of the Deputy Director, Security Law Enforcement Division. The Lottery may reject a bid or terminate the Contract based on the results of these investigations as provided by California law and the Lottery Act.

Furthermore, Agency understands and agrees that, in furtherance of the Lottery’s full disclosure requirements, any person associated with the performance of the Contract may be fingerprinted and may be required to complete a Personal History Statement and an Authorization to Release Personal Background Information form.

The Lottery reserves the right to disapprove any Agency and/or subcontractor personnel assigned to the Lottery Contract. Any personnel deemed unacceptable to the Lottery shall immediately be removed from the Contract and all facilities. All subcontracts shall include a provision implementing this right.

Agency and/or subcontractor personnel shall not be assigned to the Lottery Contract if they have ever been convicted of a felony, gambling-related offense, or a crime involving dishonesty, fraud, or moral turpitude or the underlying facts of the crime involve dishonesty, fraud, moral turpitude, or a felony DUI (driving under the influence), or any crime for which employment of such personnel may reasonably impugn Agency’s business or reputation. This Contract may be subject to termination if Agency knowingly assigns to or fails to remove from the Lottery Contract, personnel with criminal convictions as described above.

Agency may be required to reimburse the Lottery for necessary and reasonable costs incurred by the Lottery in conducting background investigations pursuant to the terms and conditions of the Contract, including travel, lodging, per diem, document procurement, site inspections, fingerprinting and any other necessary and reasonable expenses.

7.2 Agency Evaluation

The Contract Managers for the Lottery and Agency may meet as often as necessary to review and evaluate progress and performance. Review and evaluation criteria will be established by the Lottery Contract Manager and may include problem areas and future

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performance under the Contract and any other subject relating to completion of tasks under this Contract.

7.3 Project Monitoring

The Lottery will have access to all internal and external reports and documents used by Agency in the performance and administration of this Contract.

7.4 Disabled Veteran Business Enterprise/Small Business Participation Monitoring

Where applicable, the Lottery will monitor Agency’s disabled veteran business enterprise and small business participation. Documentation may be requested from Agency at any time.

7.5 Access to Financial and Accounting Records

Agency and its subcontractors for this Contract are required to maintain financial and accounting records and other documents and evidence, including but not limited to electronic versions, hereinafter “documents,” pertaining to the fulfillment of the Contract obligations, in accordance with generally accepted accounting principles and other procedures that may be specified by the Lottery, for four years from the date of final payment under the Contract. Agency shall make these documents available to the Lottery upon request. All duly authorized representatives of the Lottery may examine, audit and copy all the information described in this section.

7.6 Audit Provisions

The Lottery reserves the right to audit Agency records, procedures, and operations as they relate to the Lottery. Audits may include both announced and unannounced inspections and on-site audits. Audits may include the place(s) where duties under the Contract are being performed. The Lottery's auditors, the State Controller's Office or an independent firm specified by the Lottery may conduct the audits.

Agency shall ensure that the subcontractors providing services under the Contract, if any, fully comply with the inspections and on-site audits referenced in this subsection.

7.7 Dispute Resolution

A. If a dispute arises out of the Contract that remains unresolved after good faith negotiations between the Lottery and Agency, the parties will submit the dispute to binding arbitration unless the parties mutually agree to another form of alternative dispute resolution. Notwithstanding any dispute, Agency will proceed diligently with performance of the Contract.

B. Arbitration will be conducted under the Commercial Arbitration Rules of the

American Arbitration Association. The parties to the arbitration will share equally in the costs of arbitration. Each party will be responsible for its own attorney’s fees and costs. The arbitration must be held in Sacramento County before an arbitrator who is acceptable to both parties. In the event that the parties cannot agree on an

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arbitrator, one will be appointed after either party petitions the court pursuant to California law. The arbitrator’s decision will be final and binding, and will be provided in the proper form to be entered as a judgment in a court of competent jurisdiction in Sacramento County.

C. In the event that the parties agree on another form of alternative dispute resolution

to address a particular dispute, this section will not be construed to limit the parties’ ability to utilize such a process. Any alternative dispute resolution process that is mutually agreed upon by the parties will be considered final and binding on both parties, and no further process will be permitted.

7.8 Notice of Delay

Whenever Agency has knowledge that any actual or potential situation, including but not limited to labor disputes, will delay or threatens to delay timely performance of the work under this Contract, Agency shall immediately provide the Lottery Contract Manager written notice including any relevant information.

8.0 EXPIRATION OR TERMINATION OF CONTRACT 8.1 Expiration of the Contract

Absent early termination of the Contract as provided in this subsection, the Contract will expire at the end of its term and any applicable extension(s).

8.2 Termination for Default

A. The Lottery may, by written notice of default to Agency, terminate the Contract in whole or in part if:

1. Agency fails to perform any material provision of this Contract; 2. Agency fails to deliver goods, materials, products, deliverables, services

and advertising, or other items within the Scope of Work, within the time specified by the Lottery;

3. Agency breaches the Contract’s standard of confidentiality; 4. Agency fails to sustain a level of economic viability in its overall operations

such that the Lottery can reasonably be assured of its ability to continue to comply with all operational requirements of this Contract, including those provisions relating to loss prevention;

5. A court of competent jurisdiction finds that Agency or any of its principals or

assigned personnel has failed to adhere to any law, ordinance, rule, regulation or order that may reasonably impugn Agency’s business in such a way as to call into question the security, integrity or competence of Agency or the Lottery;

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6. Agency files a case under the Federal Bankruptcy Code or is seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, receivership or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any case or petition against it under any such law; or

7. Agency has knowingly, or acting with a reckless disregard of the truth,

furnished any material statement, representation, warranty or certification to the Lottery which is false, deceptive, or incomplete.

B. In the event of termination for breach under this subsection, the Lottery may obtain

a replacement Agency on an emergency or interim basis to provide the services and/or goods which Agency agreed to provide under this Contract. The Lottery will collect from Agency the difference between the compensation stated in this Contract and the actual cost to the Lottery of obtaining and utilizing an interim replacement Agency. The Lottery will also collect actual costs, including administrative expenses and re-procurement costs, incurred to process and procure a permanent replacement Agency. The Lottery will collect sums it is due by offsetting the amount from any payments due to Agency or by any other means.

C. If the Lottery terminates the Contract for default, the Lottery requires Agency to

transfer title and deliver to the Lottery any and all: (1) completed or partially- completed goods, materials, products, deliverables, services, and advertising; and (2) license rights to any intellectual property that Agency has produced or acquired for the Contract, in addition to any other property in Agency’s control in which the Lottery has an ownership interest. Agency shall protect and preserve all Lottery property in its possession.

D. The rights and remedies of the Lottery in this subsection are in addition to any

other rights and remedies provided by law or under the Contract. 8.3 Termination Based on Determination of Illegality

The Lottery may terminate, in whole or in part, and reduce Agency’s future compensation (on a pro-rata basis, based on the reduction in services to be provided by the Agency) under the Contract immediately upon its determination that an activity or operation supported by the Contract is no longer lawful for reasons including, but not limited to, court decision, legislative action, administrative decision, or advice of counsel. Upon receipt of notice of termination or reduction based on a finding of illegality, Agency shall immediately cease performance of such activity or operation and mitigate its damages.

8.4 Termination for Convenience

The Lottery retains the option to immediately terminate the contract for the Lottery’s convenience upon 30 days’ written notice. Upon receipt of Notice of Termination, Agency shall cease performance and mitigate damages. Agency will be entitled to compensation upon submission of invoices and proper proof of claim for that portion of the services that were satisfactorily rendered or provided before the effective date of termination. For purposes of clarity, the Agency shall be entitled to its monthly fees through the termination

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date; if termination falls on a date other than the last day of the month, the final monthly fee will be pro-rated. The Lottery may, in its sole discretion, compensate Agency for expenses incurred as a result of binding commitments made in connection with Agency’s performance of the contract. Agency shall submit proof of such expenses incurred to the Lottery’s satisfaction. In the event of termination for convenience, Agency shall furnish copies of all materials related to performance hereunder at the time of termination.

9.0 MISCELLANEOUS PROVISIONS 9.1 Force Majeure

Neither Agency nor the Lottery will be liable for any delay in, or performance failure under the Contract due to a Force Majeure occurrence, provided that Agency uses reasonably- diligent efforts to avoid or otherwise minimize the impact of an event of Force Majeure on Agency’s performance. Any such delay in or performance failure will not constitute default or give rise to any liability for damages. The existence of a delay or failure will extend the period for performance to the extent determined by the Lottery’s Contract Manager.

For purposes of this Contract, “Force Majeure” means an act of God or public enemy, earthquake, fire, flood, explosion, epidemic, quarantine restriction, strike, freight embargo or closure of all major access roads to geographic area, action of the elements, governmental interference, rationing, or any other cause which is beyond the control of the party affected, and which, by the exercise of reasonable diligence, a party is unable to control.

9.2 Waiver of Provisions

No term or provision of this Contract will be deemed waived and no breach excused unless such waiver or consent to the breach is in writing and signed by the signatory to this Contract, or his or her successor, on behalf of the party against whom such waiver or consent is sought to be enforced. No consent by either party to a waiver or a breach by the other, whether express or implied, constitutes consent to, waiver of, or excuse for any other breach or subsequent breach except as expressly provided in the written waiver or consent.

9.3 Contract Documents

The Contract consists of three documents. If there are inconsistencies or ambiguities in the Contract, the following documents shall be used to interpret the Contract together in the following order of precedence in interpretation:

A. Contract Terms and Conditions and all attachments thereto, as amended from time

to time. B. Lottery’s Request for Proposal (RFP) #50077, dated July 28, 2017, and any

amendments thereto.

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C. Agency’s response to RFP #50077 and any clarifications/amendments submitted in response to requests by the Lottery.

Each party acknowledges that it has read this Contract, understands it, and agrees to be bound by its terms.

9.4 Notices in General

Any notice, request, demand, consent, waiver, or other item required or permitted under this Contract or applicable law shall be in writing and will be deemed duly given or made only: (a) if personally served upon the party intended to receive it, in which case it is effective when delivered; or (b) if sent by certified mail, return receipt requested, postage prepaid, addressed to the party at its address set forth below, in which case it is effective on receipt by any person residing at such address; or (c) is sent by FAX with a copy sent on the same date by first class mail, postage prepaid, addressed to the party at its address set forth below, in which case it is effective as of the date of mailing. A party may change its address for purposes of this Contract only by giving written notice to the other in the manner set forth herein.

LOTTERY AGENCY

Name: California State Lottery Address: 700 North 10th Street Sacramento, CA 95811 Phone #: FAX #: Email: Attention:

9.5 Invalidity in Whole or in Part/Severability

If any provision of this Contract is held illegal, invalid, or unenforceable under any applicable rule or law, such invalidity will not affect other provisions which can be given effect without the invalid provisions, and to this end, such provision(s) is declared to be severable.

9.6 Execution of Counterparts

The parties deem an executed copy of this Contract as having the same force and effect as the original document.

9.7 Sections and Subsection Headings

The section and subsection headings contained herein are for convenience in reference and are not intended to define the scope of any provision of the Contract.

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9.8 Assignment

A. Agency may not assign any performance of or payment for the Contract or any portion of the Contract without the prior written consent of the Lottery. Any attempt by Agency to make such assignment without the prior written consent of the Lottery will be void and will constitute a material breach of the Contract.

B. Agency shall submit requests to assign the contract in writing, to the Lottery

Contract Manager. Agency shall not take any action to complete assignment of the Contract without prior written approval from the Lottery.

9.9 Subcontracting

Agency may enter into subcontracts (subject to the requirements set forth in this section) pursuant to the Lottery’s competitive bidding procedures (found at www.calottery.com), the Agency must solicit and obtain proposals from at least three potential subcontractors if the subcontract involves an expenditure of more than $100,000 to a single subcontractor. This requirement may be waived by the Lottery in writing.

Upon request, Agency must provide: (1) verification that each subcontractor agrees to be bound to Agency in the same manner and in all respects as Agency is bound to the Lottery, (2) a detailed description of the work to be subcontracted and (3) a copy of each proposed, written subcontract. The Lottery Contract Manager may approve or disapprove a subcontractor at any time.

Nothing contained in any Agency subcontract may create any contractual relationship between the Lottery and subcontractors. Agency agrees to be as fully responsible to the Lottery for the acts and omissions of its subcontractors and persons either directly or indirectly employed by them as it is for the acts and omissions of persons directly employed by Agency.

Agency's obligation to pay its subcontractors is an independent obligation from the Lottery's obligation to make payment to Agency. As a result, the Lottery will have no obligation to pay or to secure payment for any Agency subcontractors.

9.10 Independent Agency

Agency will be an independent agent of the Lottery in the performance of the Contract. Agency will have the sole, absolute, and exclusive control of the manner and means of its performance under the terms of this Contract except as expressly set forth herein.

9.11 Joint Ventures and Partnership – Joint and Several Liability

Each participant in a joint venture, proposal, or partnership is jointly and severally liable for the performance of the entire Contract, and each participant shall designate, in writing, one individual having authority to represent Agency in all matters relating to the Contract. The Lottery assumes no responsibility or obligation for the division of orders, purchases, or payments among participants.

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9.12 Travel and Expenses

Reimbursement for travel expenses is subject to pre-approval by the Lottery Contract Manager. If approved, travel and expenses (including air travel and car rental) will be reimbursed at the current California Department of Human Resources, approved travel rates for excluded employees (available at www.calhr.ca.gov). (See also Exhibit C, Cost Audit Guidelines.) All travel reimbursements incurred by the Agency will count against the maximum amount obligated under the Contract.

9.13 Standards of Conduct

Agency shall be responsible for maintaining satisfactory standards of employee competency, conduct, appearance, and integrity. Agency is responsible for ensuring that employees do not disturb papers on desks, open desk drawers or cabinets, or use Lottery telephones except as authorized.

9.14 Audit Requirements for Media Purchases

The Lottery Internal Audits Office or its designee may, with reasonable notice, audit selected media purchase invoices and other related documents to confirm media purchase costs. Agency shall, upon request, provide copies of documentation to the Lottery Internal Audits Office or its designee.

Agency must obtain vendor billings log or other documentation to verify spots aired or other media placements and maintain the documentation for four years after Contract expiration and, upon 15 days’ notice, the Lottery’s Internal Audits Office or designee may require access to the logs and/or video verification to verify spots or other media placements billed.

9.15 Internal Control Audit

Agency shall, upon approval of the Lottery Contract Manager, retain an independent certified accounting firm(s) to conduct an independent Internal Control Audit of Agency’s control systems. The cost of the external certified accounting firm(s) shall be reimbursed by the Lottery provided it results in the type of report specified by the Lottery’s Contract Manager and covers the control examined objectives and the time period he or she sets forth. Audits required pursuant to this section shall occur no more frequently than once every two years.

9.16 Samples

Samples of items, work, goods, materials, products, deliverables, services, advertising, and similar products and efforts may be required by the Lottery for inspection and shall be furnished free of expense to the Lottery.

10.0 OWNERSHIP AND DEVELOPMENT 10.1 Lottery Intellectual Property

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A. Intellectual property owned by the Lottery, including but not limited to trademarks, logos, trade secrets, and copyrights, is hereinafter collectively referred to as “Lottery Property.”

B. Lottery Property is and shall remain at all times the sole and exclusive property of

the Lottery. C. Unless approved by the Lottery Contract Manager in writing, Lottery Property may

not be revised or altered by Agency in any way, and shall be displayed as provided and approved by the Lottery.

D. Lottery Property shall be used by Agency in a professional manner and solely in

connection with the activities authorized under the Contract. Agency shall not permit any third party to use Lottery Property without the express prior written approval of the Lottery. Lottery Property may not be used by Agency in any manner that: diminishes the value of, or otherwise dilutes the Lottery’s trademarks; discredits the Lottery or tarnishes the Lottery’s reputation and goodwill; is false, misleading or likely to cause confusion; is fake or deceptive; violates the rights of others; violates any federal, state or local law, regulation or other public policy; or mischaracterizes the relationship between the parties, including but not limited to the fact that the Lottery is a separate and distinct legal entity from Agency.

E. The Lottery shall have the right, from time to time, to request complete samples of

use of Lottery Property by Agency from which the Lottery may determine compliance with these terms and conditions.

F. Use of Lottery Property by Agency shall create no rights for Agency in or to such

Property or for its use beyond the terms and conditions of this Contract. All usage of Lottery Property by Agency shall terminate immediately upon the termination or expiration of this Contract. Agency’s obligations to protect Lottery property shall survive the termination or expiration of this Contract.

10.2 Ownership of Work Product

A. The Lottery shall own and retain all right, title and interest in and to all goods, materials, products, deliverables, services and advertising, including all tangible and intangible objects, things, and concepts, outcomes to be achieved, hardware, software, or design products, concepts, media, social networking, or documents and all other results and proceeds of the services hereunder, in all stages of completion, including without limitation any and all graphics, designs, artwork, images, reports, documents, materials, techniques, ideas, concepts, logos, slogans, specifications, user interfaces, data, data templates, database structures and fields, outlines, drafts, derivatives, scripts, know-how, algorithms, software, computer code, routines or subroutines, specifications, plans, notes, drawings, designs, text, audiovisual works, inventions, data, information, and other items, expressions, works of authorship or work product of any kind that are authored, produced, created, conceived, collected, developed, discovered or made by Agency in connection with the services or which relate in any manner to the services or the deliverables or which result from any work performed by Agency

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for Lottery, including without limitation any and all copyrights, database rights and other intellectual property rights therein (collectively the “Work Product”). To the maximum extent permitted by law, the Lottery shall be deemed to be the "author" of all copyrightable Work Product and all such Work Product will constitute "works made for hire" under the U.S. Copyright Act (17 U.S.C. §§ 101 et seq.) and any other applicable copyright law. Agency hereby waives any and all moral rights or equivalent rights under the laws of any applicable jurisdiction (including without limitation rights of integrity and attribution) in and to the Work Product. To the extent that any Work Product does not constitute a work made for hire, Agency hereby irrevocably transfers and assigns to Lottery all right, title and interest in and to the Work Product, including without limitation all copyrights, patent rights and patents, trademarks and other intellectual property and proprietary rights therein throughout the world.

B. Agency acknowledges and agrees that without limiting any section herein, the

rights vested in and transferred to Lottery in and to the Work Product include without limitation the following:

1. Copyright. The Lottery shall be the sole owner of the undivided interest in

all copyrights and all similar or equivalent rights throughout the world in the Work Product, whether vested, contingent or future, including without limitation all economic rights and the exclusive rights to reproduce, fix, adapt, modify, translate, create derivative works from, manufacture, market, introduce in circulation, publish, make available, distribute, sell, license, sublicense, transfer, rent, lease, transmit or provide access electronically, broadcast, display, perform, enter into computer memory, and use the Work Product, all modified and derivative works thereof, and all portions and copies thereof in any form.

2. Moral Rights. Agency and all employees, persons, agents and

subcontractors, and other entities who may have claims of moral rights (or similar or equivalent rights under the laws of any jurisdiction) in any part of the Work Product, have agreed or Agency will obtain their agreement that (a) they shall have no objection to publication, use and exploitation of the Work Product as contemplated by this Contract; (b) they shall remain anonymous authors without attribution or credit, acknowledging that the Lottery or its designees may be designated as author; (c) the Lottery or its successors, assigns or licensees may make future modifications and adaptations to the Work Product, and may make disclosure and disposal of the Work Product, and any modifications thereof, in the manner that the Lottery or its successors, assigns, or licensees see fit, without any right of approval, withdrawal or public renunciation by such persons; and (d) their remuneration for the Work Product is complete, adequate and reasonable. For any and all such rights in the nature of moral rights or otherwise that are not capable of vesting in or transfer to the Lottery under applicable law, Agency waives and agrees never to assert such rights against the Lottery or its successors, assigns or licensees, and to cause its employees and subcontractors to agree to the foregoing covenants.

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3. Patent, Design, Trademark Rights. The Lottery shall be the sole owner of all rights in and to any inventions, designs, database rights, and marks conceived, created or developed in the course of creation of the Work Product, including without limitation, all utility and design patent rights and equivalent rights in and to such inventions and designs, and all trade and service mark rights, throughout the world.

4. Exclusive Worldwide License. In the event that by operation of law,

notwithstanding the provisions of this Contract and/or Agency’s execution of any further documents to effectuate the transfer of rights to the Lottery hereunder, Agency is deemed to have retained rights in any portion of the Work Product, Agency grants to the Lottery, its successors, assigns, and licensees, an exclusive, irrevocable, worldwide, fully-paid, royalty-free license to reproduce, fix, adapt, modify, translate, create derivative works from, manufacture, have manufactured, introduce into circulation, publish, distribute, make available, sell, license, sublicense, transfer, rent, lease, transmit or provide access electronically, broadcast, display, perform, enter into computer memory and use and otherwise exploit the Work Product, all modified and derivative works thereof, all portions and copies thereof in any form, and all inventions, designs and marks embodied therein, throughout the world in all media whether now known or hereafter devised.

5. Rights in Tangible Media. The Lottery shall be the sole owner of all tangible

and intangible copies, documents, magnetic or optical media, or other materials, chattel or personal property created by or for Agency in connection with this Contract. Upon written notice from the Lottery, Agency shall deliver to the Lottery all embodiments of the Work Product in electronic and tangible formats as specified by the Lottery, and/or destroy and certify destruction of all copies of the Work Product in Agency’s possession or control. Agency shall maintain the Work Product and other materials of the Lottery in accordance with the Lottery’s information security requirements and will certify in writing compliance with such requirements upon request.

6. Applications, Renewals, Further Assignments and Transfers. The rights

vested in, assigned to, transferred and/or licensed to the Lottery hereunder include without limitation: (a) the exclusive right to make and secure applications and registrations of copyright and other intellectual property rights; (b) the exclusive exercise of such intellectual property rights for the unlimited, entire period of such rights throughout the world; (c) the exclusive right to renewals, reversions, and extensions of such intellectual property rights; (d) the exclusive right to authorize, transfer, license, sublicense, deal in, dispose of and assign others to own or exercise such rights, title and interests; and (e) the exclusive right to initiate, pursue, prosecute and settle past, present and future claims of infringements relating to such intellectual property rights. Without limitation, Agency acknowledges that all rights of every kind and nature whatsoever in the Work Product may be exploited, assigned and licensed by the Lottery to such third parties as it sees fit, and the Work Product is expressly acknowledged to be specially ordered and commissioned by the Lottery.

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10.3 Acknowledgments

Agency acknowledges and agrees that the Lottery is the exclusive holder of all copyright, trademark, patent, and other intellectual property and proprietary rights in the Work Product worldwide and that Agency has no right to and will not directly or indirectly reproduce, fix, adapt, modify, translate, create derivative works from, manufacture, market, introduce into circulation, publish, distribute, sell, license, sublicense, transfer, rent, lease, transmit or provide access electronically, broadcast, perform, display, enter into computer memory, or use or exploit the Work Product, or any portion or copy thereof in any form, or any such rights, or authorize or assign others to do so, or derive any other work from concepts, information or elements of the Work Product, or permit any third party to do any of the foregoing, except as permitted by this Contract. In the event that the Lottery provides Agency with technology, software, resource files, tools and other materials with which to prepare the Work Product, Agency will safeguard and use such materials only for the purpose of preparing the Work Product and return such materials and all copies thereof at any time upon request of the Lottery.

10.4 Further Assurances

At the Lottery’s expense, but without payment of additional compensation, Agency shall execute all documents and take all actions necessary or reasonably requested by Lottery to document, obtain, maintain, perfect or assign its rights to the Work Product. Agency shall also cause its employees, agents and subcontractors to execute such documents and take such actions as described above. If Agency fails or refuses to execute any such instruments within 10 business days after the Lottery’s request, Agency hereby appoints the Lottery as Agency's attorney-in-fact (this appointment to be irrevocable and a power coupled with an interest) to act on Agency's behalf and to execute such documents. Agency will not contest the validity of the Lottery's rights in the Work Product and will cause its employees, agents and subcontractors to comply with the foregoing. All such Work Product will be deemed to be the confidential, proprietary and trade secret information of the Lottery.

10.5 Third-Party Materials

Agency will not disclose to the Lottery or use in its work any trade secrets or confidential information of a third party which Agency is not lawfully entitled to disclose or use in such manner. Agency will not use any equipment, supplies, facilities, computer code, work product, inventions, materials or intellectual property of any other party (the "Third-Party Materials") in any Work Product or in Agency's performance under this Contract unless: (a) Agency has the full right and authority to do so without violating any rights of any third party; (b) Agency has obtained all necessary rights to enable Agency to perform its obligations under the Contract and grant the rights granted herein and to permit the Lottery to utilize the Third-Party Materials as contemplated under this Contract at no additional cost to the Lottery; (c) the Lottery's use of such Third-Party Materials will not restrict or impair in any manner its use, in perpetuity, of any deliverables or Work Product or subject the Lottery to any obligation or liability; and (d) such Third-Party Materials are specifically identified to the Lottery in writing in advance of any use and the Lottery has agreed in writing to such use.

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10.6 Transfers and Consents

Agency shall secure in writing in form satisfactory to the Lottery all transfers of rights and other consents necessary for Agency to make the assignments, licenses and other transfers set forth in this section. Without limitation, Agency shall secure written agreements and consents from its employees and subcontractors that all works created pursuant to this Contract (including the Work Product) fall within the scope of their employment duties or engagement, as applicable, and that all economic rights in such works vest in Agency as the employer and are fully transferable, and Agency shall secure such written transfers of rights and all other required consents from all other persons or entities whose services were, are or will be rendered in connection with the Work Product. Upon request, Agency will provide the Lottery with copies of all such contractual documentation and shall include the Lottery as a third-party beneficiary of such agreements or cause such parties to execute a further acknowledgment and assignment for the benefit of the Lottery if requested.

11.0 CALIFORNIA LOTTERY INFORMATION SECURITY STANDARDS 11.1 Information Security

Information security is the protection of the integrity, availability and confidentiality of information and the resources used to enter, store, process and communicate the information.

11.2 Agency Responsibilities

Information security must be ensured by the Agency as the Agency may have physical or electronic access to the Lottery’s sensitive or confidential information, and this information may be contained in systems that directly support the Lottery’s mission. This includes physical access to IT hardware and software, and the services associated with computer systems, networks, and telecommunications. This also includes access or exposure to printed materials and other paper records.

The Agency and all Agency personnel must not use or redistribute any Lottery information except as specified in the Contract or upon written Lottery approval.

11.3 Information Security Breach

An information security breach is defined as the unauthorized acquisition of information or computerized data that compromises the security, integrity, confidentiality, privacy, or availability of information associated with the Lottery Contract and maintained by the Agency. The Agency must comply with the notification requirements of California Civil Code section 1798.82, et seq. in the event of an information security breach. The Agency must disclose to the Lottery any breach of the security of any information system, data, or system containing personal information (PI) or personally identifiable

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information (PII), including a breach where the information system, data or system information was or is reasonably believed to have been acquired by an unauthorized person. The Agency must notify the Lottery Contract Manager within two hours of any confirmed or suspected security incident or breach. If the Agency maintains computerized data pursuant to the Scope of Services for the Contract and the Agency does not own this data, the Agency must also notify the owner or licensee of the information of any breach of the security of the data immediately following discovery, if the PI or PII was, or is reasonably believed to have been acquired by an unauthorized person. The disclosure of the breach will be made in the most expedient time possible and without unreasonable delay, consistent with any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.

Security Breach Contact Information: Lottery Contract Manager Name: Email: Phone:

11.4 Information Security Audit

The Agency must keep audit logs of any access or other activities associated with Lottery information. The Lottery has the right to audit the Agency’s information security controls and associated plans and processes to verify compliance with the Contract.

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EXHIBIT C COST AUDIT GUIDELINES

This section supplements the requirements of Exhibit B, Draft Contract Terms and Conditions, section 5.4, Invoicing. 1. Estimate Requirements. An approved and signed estimate must be on file at the Lottery

prior to beginning any work and for all invoices received. All estimates must include the following information either on the estimate, or on an attachment to the estimate. If the information is provided as an attachment, the attachment must be referenced on the estimate.

➢ Estimate/Job Number ➢ Product/Project Name ➢ Job Description and/or Special Requirements ➢ Estimated Deliverable Cost ➢ Air Dates (if applicable)

2. Subcontracted Work. All estimates for subcontracted work must be submitted from the

Agency, specifying Agency job number and product/project. The Agency is solely responsible for processing of all subcontractor estimates. Agency must retain and make available upon request documentation verifying cost breakdowns. All subcontractor documentation is subject to the same guidelines set for Agency invoicing.

3. Production. All production estimates of $100,000 or more must be submitted with copies

of competitive bids obtained and, if not using the lowest bid, a justification of why the lowest bid is not being used must be attached. Line item descriptions will reflect only those line items included in the job estimate. Line item documentation that includes line items not on original or revised estimate will not be reimbursed.

Documentation must verify that no more than 50% of a TV advertising production estimate with “pre-bill” backup, will be billed prior to service. Documentation must verify that the remaining 50% was invoiced after service was performed and must include backup for the entire job. “Pre-bill” refers to the TV advertising production subcontractor’s invoice which states the estimated cost for production and requires 50% advance payment. Agency is obligated to pay the 50% of the production estimate upon presentation of a pre-bill by the subcontractor. Agency shall retain the pre-bill as backup to its own invoice without Commission for payment under this Exhibit.

4. Media. Agency must maintain documentation that supports invoices, and which includes

an industry standard summary report (such as Mediaocean or any similar report). Agency must submit such documentation to the Lottery upon request. Media invoices will only be paid upon completion of the broadcast months. All media credits must be submitted to the Lottery as soon as possible. Media invoices must be submitted within 60 days from the last day of the flight. After the final invoice is submitted, Agency must provide a closeout report, signed by both parties, detailing billing history and actual dollars spent.

RFP #50077 July 28, 2017 46

Individuals designated by the Lottery must, with reasonable notice, have access to review verification documentation required by this Exhibit, as well as, selected Agency media purchase invoices and other related documents (e.g., station affidavits, video verification) to confirm media purchase costs. These reviews may take place at the Agency’s office during regular business hours or may be conducted by submission of written material to the Lottery.

5. Shipping/Freight Charges. Agency is expected to utilize lowest cost modes and carriers

to safely transport their shipment. Shipping costs should be submitted on a separate invoice from all other production costs in order to expedite payment. Shipping/Freight charges included in production invoices may delay full payment of the invoice. All shipping/freight charges over $25.00 must have supporting pre-paid freight bills available upon request.

6. Travel. Agency must obtain prior approval from the Lottery. Pre-approved travel and

expenses (including air travel and car rental) will be reimbursed at the current California Department of Human Resources approved travel rates for excluded employees (available at www.calhr.ca.gov). All travel reimbursements incurred by the Agency will count against the maximum amount obligated under the Contract.

7. Miscellaneous Costs. Must be itemized with backup receipts. 8. Revised Estimates. A revised estimate reflecting all services or charges which may

amount to more than 10% of the original estimate must be approved by the Lottery prior to additional performance and must be accompanied by a written justification stating why the increase in cost was necessary. The requirement for a written justification will apply to multiple revised estimates where each is less than 10% of the original estimate but the combined total exceeds 10% of the original estimate. Revised estimates should also include previous approved amounts and/or history of amounts. Total fiscal year expenditures cannot exceed the designated total fiscal year budget without prior approval from Lottery Contract Manager or designee.

All mutually agreed to changes relating to any of the following areas must be followed by a revised estimate reflecting the changes:

➢ Job Description and/or Special Requirements ➢ Estimated Deliverable Cost ➢ Air Dates (if applicable) ➢ Revision History

9. Revised Estimates for Specialized Programs. Costs for specialized programs may not

exceed their original estimated cost in any amount without prior Lottery approval and prior submission of a revised estimate.

10. Closeout Report. All closed jobs must be followed by a closeout report signed by both

parties reflecting the invoices paid, product/project name, purchase order number and the actual closing amount. Once a closeout report is received and signed by both parties, no further billing can be submitted, with the exception of credits. Agency may not change Lottery assigned estimate or invoice numbers after Lottery approval without prior approval

RFP #50077 July 28, 2017 47

by the Lottery Contract Manager. All canceled jobs must be followed by a closeout report reflecting all canceled portions of the job and any expenses actually incurred prior to cancellation.

RFP #50077 July 28, 2017 48

ATTACHMENT 1 AGENCY FACT SHEET

(Page 1 of 3)

Agency: _________________________________________________________________ Address: __________________________________________________________________ A. Agency History, Ownership and Key Employees

1. Founding Date- When was your agency established? 2. Mergers and Acquisitions- List any subsequent mergers, acquisitions or name changes. 3. Current Ownership- Who are the current owners of your agency? 4. Key Executives- Provide a short biography of no more than six of your office’s key

executives and describe their current roles. 5. Principals- Provide names and titles of principals and a short biography. 6. Parent Company/Affiliation- Provide a listing of all companies/agencies that are owned

or affiliated with your parent company. B. Current Clients, Account Gains and Losses

1. Current Clients- List all current clients—brands, products, and services—managed by your office. Rank them by size, indicate the services provided, the dates they were acquired and, if possible, approximate budget ranges for each.

2. Account Gains- Of the accounts acquired within the past two years, please comment on

why your agency was chosen to service these new accounts. 3. Account Losses- Of the accounts lost in the past two years, explain why they left or

were resigned by the agency. C. Current Size and Current Distribution by Media 1. Current Size- Summarize the total revenue and billings for calendar years 2014, 2015

and 2016, number of employees and number of accounts currently being handled directly by your office.

Calendar Year Total Revenue/Year

Total Billings/Year

Number of Employees

Number of Accounts

2014

2015

2016

RFP #50077 July 28, 2017 49

_______________________ Agency

ATTACHMENT 1

AGENCY FACT SHEET (Page 2 of 3)

2. Spending by Media- Chart your agency’s current spending by media— television, radio,

outdoor, digital, social, etc. Provide rough figures and percentages by media using the grid below.

PERCENTAGE BREAKDOWN BY MEDIA:

Television Print Digital Other

Network X% Newspaper X% Display/Interactive X% Outdoor X%

Spot X% Consumer Pubs X% Social X% Direct mail X%

Syndication X% Trade Pubs X% Mobile X% Experiential X%

Cable X% Video X% Audio Digital X%

Search X% Audio Terrestrial X%

Other X%

D. Scope and Nature of Agency Services

1. Agency Services- List the various services offered by your agency and the number of full time employees dedicated to each department. Please include account management, strategic services, creative, media planning and buying, production, data analytics, and experiential marketing.

2. Digital Services- In addition to any digital services listed above, please describe

established strengths and capabilities in the digital realm, website development, ecommerce, and database analytics used to build customer insights. Please indicate if you rely upon a trusted partner(s) for any or all of these tasks. Feel free to include any process charts, to illustrate your specific approach.

3. Other Specialized Services- List any other specialized services your agency offers to its

clients, either directly or indirectly through its parent or sister companies, subsidiaries or network of affiliations.

4. Media Management- Describe your capabilities and strengths in media research,

analytics, planning, buying, monitoring and overall stewardship of your clients’ funds. Please make sure you address traditional as well as digital media as applicable.

5. Use of Media Buying Services- If all or a certain portion of your clients’ media is not

planned or purchased by your agency, please indicate with whom the agency works in this regard.

RFP #50077 July 28, 2017 50

_______________________ Agency

ATTACHMENT 1 AGENCY FACT SHEET

(Page 3 of 3) E. References

Client references- List six client references (name, title, company, address, telephone, email and fax number) Lottery representatives might speak with about the effectiveness of your creative.

RFP #50077 July 28, 2017 51

ATTACHMENT 2 CERTIFICATION

(Page 1 of 6) I. AGENCY INFORMATION Name of Agency: _____________________________________________________________

Address: ___________________________________________________________________

State/City/Zip Code: __________________________________________________________

Contact Person: _____________________________ Telephone: _____________________

Email: _____________________________________

List person(s) legally authorized to contractually bind the agency. 1. __________________________________________________ (Name) (Title) __________________________________________________ (Address) 2. __________________________________________________ (Name) (Title) __________________________________________________ (Address) (Attach additional pages if needed) II. AGENCY CERTIFICATION By executing this Certification, the agency acknowledges that failure to comply with any of this Certification’s terms may result in disqualification from participation in the solicitation process. The agency has reviewed, agrees to, and certifies the following:

a. The agency meets all minimum qualifications specified in the section entitled “Minimum Agency Qualifications.”

b. The agency agrees the Lottery will not be liable for any of the costs incurred by agency in preparing, submitting, or otherwise participating in a response to this solicitation.

c. The agency’s response to the solicitation constitutes an irrevocable offer for 180 days

following the date proposals are due to the Lottery.

d. The agency has made no attempt to induce any other person or entity to submit or not to submit a proposal.

RFP #50077 July 28, 2017 52

________________________ Agency

ATTACHMENT 2 CERTIFICATION

(Page 2 of 6)

e. The prices in the proposal have been developed and calculated independently, without consultation, communication or agreement on any matter relating to such prices with any other agency or competitor for the purpose of restricting competition or providing a competitive advantage.

f. The agency has read the solicitation, understands it, and agrees to comply with all Terms and Conditions.

g. The agency agrees to provide insurance/bond coverage as described in the Contract Terms

and Conditions. h. Recognizing that initial payments to the agency may be delayed approximately 45 days, the

agency has sufficient resources to meet his/her obligations during this period. III. CONTRACTOR CERTIFICATION CLAUSES By executing this Certification, the prospective agency or its authorized representative certifies under penalty of perjury that the prospective agency has reviewed and agrees to be bound to the Contract Terms and Conditions and the following Agency Certification Clauses.

A. NONDISCRIMINATION CLAUSE: During the performance of this Contract, agency and its subcontractors will not unlawfully discriminate, harass or allow harassment, against any employee or applicant for employment because of sex, sexual orientation, race, color, ancestry, religious creed, national origin, disability (including HIV and AIDS), medical condition (cancer), age, marital status, and denial of family care leave. Agency and subcontractors will insure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Agency and subcontractors will comply with the provisions of the Fair Employment and Housing Act (Government Code, Section 12990 et seq.) and the applicable regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285.0 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations are incorporated into the Contract by reference and made a part thereof as if set forth in full. Agency and its subcontractors will give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement. Agency will include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Contract.

B. DRUG-FREE WORKPLACE REQUIREMENTS: Agency will comply with the

requirements of the Drug-Free Workplace Act of 1990 and will provide a drug-free workplace by taking the following actions:

RFP #50077 July 28, 2017 53

________________________ Agency

ATTACHMENT 2 CERTIFICATION

(Page 3 of 6)

1. Publish a statement notifying employees that unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited and specifying actions to be taken against employees for violations.

2. Establish a Drug-Free Awareness Program to inform employees about:

a. the dangers of drug abuse in the workplace; b. the agency’s policy of maintaining a drug-free workplace; c. any available counseling, rehabilitation and employee assistance programs; and, d. penalties that may be imposed upon employees for drug abuse violations.

3. Every employee who performs work under the Contract must receive a copy of the

agency’s drug-free workplace policy statement and agree to abide by the terms of the agency’s statement.

4. Failure to comply with these requirements may result in suspension of payments under

the Contract or termination of the Contract, and the agency may be ineligible for award of any future state contracts if the agency has made false certification, or violated the certification by failing to carry out the requirements as noted above.

C. NATIONAL LABOR RELATIONS BOARD CERTIFICATION: The agency certifies that no

more than one final unappealable finding of contempt of court by a federal court has been issued against the Agency within the immediately preceding two-year period because of the agency's failure to abide by a federal court order to comply with a directive of the National Labor Relations Board.

D. DOMESTIC PARTNERS: For contracts executed or amended after July 1, 2004, the agency may elect to offer domestic partner benefits to the Agency’s employees. Agency cannot require an employee, on the basis of marital or domestic partner status, to cover the costs of providing any benefits which have otherwise been provided to all employees.

IV. DOING BUSINESS WITH THE STATE OF CALIFORNIA The following laws apply to persons or entities doing business with the State of California. A. CONFLICT OF INTEREST: Agency is aware of the following provisions regarding current or

former state employees. If the agency has any questions about the status of any person rendering services or involved with the Contract, the Lottery will be contacted immediately for clarification.

RFP #50077 July 28, 2017 54

________________________ Agency

ATTACHMENT 2 CERTIFICATION

(Page 4 of 6)

Current State Employees: 1. No state officer or employee may engage in any employment, activity or enterprise from

which the officer or employee receives compensation or has a financial interest and which is sponsored or funded by any state agency, unless the employment, activity, or enterprise is required as a condition of regular state employment.

2. No state officer or employee may contract as an independent contractor with any state

agency to provide goods or services. Former State Employees:

1. For the two-year period from the date he or she left state employment, no former state

officer or employee may enter into a contract in which he or she engaged in any of the negotiations, transactions, planning, arrangements or any part of the decision-making process relevant to the Contract while employed in any capacity by any state agency.

2. For the 12-month period from the date he or she left state employment, no former state officer or employee may enter into a contract with any state agency if he or she was employed by that state agency in a policy-making position in the same general subject area as the proposed contract within the 12-month period prior to his or her leaving state service.

3. If the agency violates any of the above provisions, such action by agency will render this Contract void.

4. Members of boards and commissions are exempt from this section if they do not receive payment other than payment for each meeting of the board or commission, payment for preparatory time, and payment for per diem.

B. LABOR CODE/WORKERS' COMPENSATION: Agency is aware of the provisions which

require every employer to be insured against liability for Worker's Compensation and the agency agrees to comply with such provisions before commencing work on this Contract.

C. AMERICANS WITH DISABILITIES ACT: Agency assures the Lottery that it complies with the

Americans with Disabilities Act (ADA) of 1990, which prohibits discrimination on the basis of disability, as well as all applicable regulations and guidelines issued pursuant to the ADA and all California accessibility statutes and regulations.

RFP #50077 July 28, 2017 55

________________________ Agency

ATTACHMENT 2 CERTIFICATION

(Page 5 of 6)

D. CORPORATE QUALIFICATIONS TO DO BUSINESS IN CALIFORNIA:

1. Agency certifies it is currently qualified to do business in California.

2. Agency certifies that it is in good standing with the California Secretary of State’s Office. E. AIR OR WATER POLLUTION VIOLATION: Agency will not be: (1) in violation of any order

or resolution not subject to review promulgated by the State Air Resources Board or an air pollution control district; (2) subject to cease and desist order not subject to review issued pursuant to Section 13301 of the Water Code for violation of waste discharge requirements or discharge prohibitions; or (3) finally determined to be in violation of provisions of federal law relating to air or water pollution.

F. PAYEE DATA RECORD FORM STD. 204: This form will be completed by all agencies except

state agencies or other governmental entities.

V. CONFIDENTIALITY STATEMENT

A. I warrant that neither the agency nor its employees will disclose any document, diagram, or information made available to it by the Lottery. I warrant that only those employees who are authorized and required to use such information will have access to it.

B. I further warrant that all materials provided by the Lottery will be returned promptly after use and all copies or derivations of the materials will be physically and/or electronically destroyed. I will include with the returned materials a letter attesting to the complete return of materials and documenting the destruction of copies and derivations. Failure to comply may subject the agency to criminal and civil liability. I authorize the Lottery to inspect and verify the above.

C. I further warrant that if awarded the Contract, the agency will not disclose to any third party information pertaining to the Contract prior to receiving the written consent of the Lottery.

RFP #50077 July 28, 2017 56

________________________ Agency

ATTACHMENT 2 CERTIFICATION

(Page 6 of 6) I, the official named below, CERTIFY UNDER PENALTY OF PERJURY that I am duly authorized to legally bind the agency and prospective Contractor to the clause(s) above and that the signature affixed below and dated constitutes a certification that all information provided by the agency and prospective Contractor is true and correct.

Contractor/Agency Firm Name (Printed)

By (Authorized Signature)

Printed Name and Title of Person Signing

Date Executed

RFP #50077 July 28, 2017 57

________________________ Agency

ATTACHMENT 3 GUARANTY (Page 1 of 2)

This guaranty is to be completed by the agency or parent company of agency. Check one of the boxes (A or B) below. Agency or parent company must sign the guaranty as appropriate and submit this guaranty with its proposal package. A. In the event that the agency is not a subsidiary corporation, it will be deemed that the

agency guarantees performance under any Contract resulting from this RFP with the full force and credit of all its assets.

B. If the agency is a subsidiary corporation, it must have this guaranty completed by the

parent corporation to guaranty the full and prompt performance of all covenants and terms and conditions of this RFP and any resulting Contract.

1. The parent company ______________________________ (guarantor) has the

financial ability to meaningfully support such guaranty; 2. The official signing of this guaranty is authorized to bind the guarantor corporation; 3. The guarantor accepts unconditional responsibility for all performance and

financial requirements and obligations of the Contract; 4. For good and valuable consideration, receipt of which is hereby acknowledged,

the guarantor is making the guaranty; 5. The guarantor stipulates that if the Contract is ultimately awarded to the subsidiary,

the Lottery will make such award in reliance upon the guaranty; 6. The undersigned corporate officer warrants (1) that he or she has personally

reviewed all pertinent corporate documents, including but not limited to articles of incorporation, bylaws, and agreements between the parent and the subsidiary; and (2) that nothing in these documents in any way limits the capacity of the parent to enter into the Contract or guaranty;

RFP #50077 July 28, 2017 58

_________________________ Agency

ATTACHMENT 3 GUARANTY (Page 2 of 2)

7. The Lottery need not take any action against the agency, any other guarantor, or

any other person, firm, or corporation, or resort to any security held by it at any time before proceeding against the guarantor and the guarantor hereby waives any and all notices and demands which may be required to be given by any other statute or rule of law and agrees that its liability hereunder will be in no way affected, diminished, or released by any extension of time, forbearance, or waiver which may be granted the agency, its successor, or assignee, and that this guaranty will extend to and include all future amendments, modifications, and extensions of the Contract and all future supplemental and other agreements with respect to matters covered by the Contract which the Lottery and agency may enter into, with or without notice to or knowledge of guarantor but guarantor will have the benefit of any such extension, forbearance, waiver, amendment, modifications, or supplemental obligations of guarantor hereunder will be coextensive with but not in excess of the obligations of its successor or assignee under the Contract.

The Guarantor agrees that unless otherwise agreed to by the Lottery the guaranty

must continue in full force and effect despite any change in the legal or corporate status of the subsidiary, including but not limited to its sale, reorganization, dissolution, or bankruptcy.

I, ___________________________, certify that I am authorized to sign and bind my company to this guaranty. ______________________________________ _____________________ Signature of Representative Authorized to Date Contractually Bind Agency OR Parent Company ______________________________________ Company Name

RFP #50077 July 28, 2017 59

ATTACHMENT 4 DISABLED VETERAN BUSINESS ENTERPRISE PARTICIPATION

Incentive Program (Page 1 of 4)

The Lottery recognizes disabled veterans for their service by establishing a Disabled Veteran Business Enterprise (DVBE) Participation Program. The program is intended to further veterans’ participation in Lottery contracting, promote competition and encourage greater economic opportunity. The Lottery has established participation goals for DVBEs, as defined in the California Military and Veterans Code, of at least 3% of overall dollars expended for Lottery contracts annually. The Lottery determines whether to include DVBE participation requirements in specific solicitations based on the availability of contracting or subcontracting opportunities within the scope of services of the particular contract. While the Lottery has not established a DVBE participation requirement for this solicitation, in order to encourage DVBE participation, the Lottery has applied a DVBE incentive as follows: Confirmed DVBE Participation DVBE Incentive

5% or Over 5% 4% to 4.99% 4% 3% to 3.99% 3% 2% to 2.99% 2% 1% to 1.99% 1%

A Bidder may achieve participation by qualifying as a DVBE and/or by contracting with DVBE subcontractors. DVBEs must perform a commercially useful function, excluding media placement costs, related to the bid specifications as required by Military and Veterans Code section 999 (b)(5)(B). The Lottery will determine whether Agencies have achieved qualifying levels of participation by comparing each Bidder’s verified DVBE percentage to the Bidder’s Price Sheet. The incentive is applied in determining the lowest monetary bid or best value by reducing the qualified Bidder’s price by the amount of the incentive as computed based on the lowest price submitted by a responsive Bidder. This reduction is applied solely for evaluation purposes. However, where the Bidder with the lowest monetary bid or best value, prior to application of the incentive, is a California certified small business, only other certified small businesses will be eligible to receive the incentive bonus. If after application of incentives, two or more responsive bids tie for lowest monetary bid or best value, the contract will be awarded to the Bidder with the highest level of DVBE participation. A DVBE may also qualify as a small business if it independently meets the Small Business Participation Program requirements. (See Attachment 5) For certification purposes, a “disabled veteran” must be a veteran of the U.S. military, naval, or air service, have a service-connected disability of 10% or more, and reside in California.

RFP #50077 July 28, 2017 60

ATTACHMENT 4 DISABLED VETERAN BUSINESS ENTERPRISE PARTICIPATION PROGRAM

Incentive Program (Page 2 of 4)

To be eligible for certification as a Disabled Veteran Business Enterprise:

• At least 51% of the business must be owned by one or more disabled veterans;

• Daily business operations must be managed and controlled by one or more disabled veterans; and

• The home office must be located in the United States. (The home office cannot be a branch or subsidiary of a foreign corporation, foreign firm, or other foreign-based business.)

In order to count toward DVBE participation, DVBEs must be certified as such by the Department of General Services at the time the bid is submitted to the Lottery. Agencies must submit with their bids (1) a copy of the DVBE certification for each DVBE and (2) the attached DVBE forms, completed and signed as indicated. Contact the Department of General Services, Office of Small Business and DVBE Services with certification questions, or visit DGS’s Website at www.dgs.ca.gov. During the term of the Contract, the successful Bidder must provide annual DVBE reports to the Lottery’s Contract Development Services Section showing DVBE participation at the levels committed to in the bid documents. In addition, the successful Bidder must provide a final report at the end of the Contract. Instructions: Agencies must complete DVBE Attachment 4 “DVBE Subcontractors to be Utilized,” for each DVBE subcontractor to be counted toward DVBE participation and include the form as part of their bids. [Please duplicate this page for additional DVBE businesses.] Any Bidder that is a certified DVBE and wishes to be counted toward DVBE participation must complete DVBE Attachment 4 “DVBE Bidder” and submit it as part of its bid. For questions regarding these instructions or attachments, please contact the Lottery’s Small and DVBE Program Specialist at (916) 822-8069.

RFP #50077 July 28, 2017 61

ATTACHMENT 4 DISABLED VETERAN BUSINESS ENTERPRISE (DVBE)

SUBCONTRACTORS TO BE UTILIZED (Page 3 of 4)

This form must be completed and signed by the Bidder and the DVBE subcontractor to be utilized. Please duplicate this page for additional DVBE businesses.

Name of DVBE___________________ Contact Person_______________________________ DVBE Certification #___________DVBE Address_________________________________________ City/State/Zip_________________________________Email_________________________________ Telephone_______________ Fax____________________________________________________ Goods/Services to be provided______________________________________________________ Percentage Participation______________% (percent of the total contract price to be paid to the DVBE subcontractor for goods and/or services identified above)

By signing below, the Bidder indicates its intent to utilize the DVBE identified above as a supplier/subcontractor of the goods and/or services indicated, for the dollar amount represented by the percentage set forth above. The Bidder also certifies that all information contained herein is true and correct. This form must be signed by a person legally authorized to contractually bind the Bidder. ________________________________ _____________________________ Bidder’s Authorized Signature Date _________________________________ _____________________________ Printed Name Company Name

By signing below, the DVBE certifies it has submitted a bid to the above-referenced Bidder and is ready, willing, and able to provide the goods and/or services identified above. This form must be signed by a person legally authorized to contractually bind the DVBE. ____________________________________ _________________________ DVBE’s Authorized Signature Date ____________________________________ ________________________ Printed Name Company Name CSL 1175 (R04/16)

RFP #50077 July 28, 2017 62

ATTACHMENT 4 DISABLED VETERAN BUSINESS ENTERPRISE (DVBE) BIDDER

(Page 4 of 4)

Bidder must complete and sign this form if Bidder is a DVBE and intends to count goods and/or services it provides towards DVBE participation on this contract.

Bidder’s Name ______________________Contact Person__________________________________ Bidder’s DVBE Certification #____________ Goods/Services to be provided_____________________________________________________________ Percentage Participation _____________% (percent of the total contract price represented by the goods/services to be provided by the DVBE Bidder (pass-through goods and/or services do not count))

By signing below, the Bidder indicates that it will provide the goods and/or services indicated for the dollar amount represented by the percentage set forth above. The Bidder also certifies that all information contained herein is true and correct. This form must be signed by a person legally authorized to contractually bind the Bidder. ________________________________ _____________________________ Bidder’s Authorized Signature Date _________________________________ _____________________________ Printed Name Company Name

CSL 1175 (R04/16)

RFP #50077 July 28, 2017 63

ATTACHMENT 5 SMALL AND MICRO BUSINESS PARTICIPATION (SMP)

(Page 1 of 6)

Small Business Preferences/Definition The Small Business Procurement and Contract Act (Gov. Code section 14835 et seq.) requires that a fair share of the state's purchases and contracts for goods, information technology, services and construction be placed with small businesses or micro businesses. In order to facilitate the participation of these businesses, the Act requires state agencies to: (1) establish small business participation goals, (2) provide a 5% small business preference; and (3) provide a non-small business preference of up to a maximum of 5% for agencies utilizing small businesses or micro businesses as subcontractors. SMP Goal and Preference Based upon the nature of the goods/services to be utilized under this solicitation (as outlined in the Scope of Services, Exhibit A), the Lottery has set a SMP Goal of 25%. Agencies that qualify as a small or micro business have met this participation goal by virtue of their small business status. For bid evaluation purposes, where there is at least one non-small business Bidder subcontracting at least 25% of its bid amount to one or more small businesses, the Lottery will calculate the preference by computing an amount not to exceed 5% from the lowest, responsible bid of a non-small business Bidder that is not subcontracting to a small business. The preference amount will be deducted from the bids of the non-small business Bidder’s subcontracting at least 25% of their bid amounts to small businesses, as referenced above. Agencies that subcontract less than 25% will receive a prorated preference. For bid evaluation purposes, where there is at least one small business Bidder, the Lottery will calculate the preference by computing an amount of up to 5% of the lowest, responsible bid of a non-small business Bidder that is not subcontracting to a small business. The preference amount will not exceed $50,000 and will be deducted from the small business’ bid amount as referenced above. During the Contract term, the Bidder’s SMP compliance will be calculated based on the Bidder’s completed work as verified by an audit of Bidder’s invoices and Bidder’s payments to designated subcontractors. Definition To be eligible for the SMP Preference as a "small business,” a company must be an independently owned and operated business, not dominant in its field of operation, with its principal place of business located in California and officers domiciled in California, and which together with affiliates is:

RFP #50077 July 28, 2017 64

ATTACHMENT 5 SMALL AND MICRO BUSINESS PARTICIPATION PROGRAM

(Page 2 of 6)

• A business with 100 or fewer employees and average annual gross receipts of $14,000,000 or less over the previous three years, or

• A manufacturer with 100 or fewer employees. A manufacturer is a business that is both:

(1) Primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products; and

(2) Classified between Codes 31 to 339999, inclusive, of the North American Industrial

Classification System (NAICS) Manual, published by the United States Census Bureau, 2007 edition.

To be eligible for the SMP Preference as a "micro business,” a company must be a small business that, together with affiliates, has average annual gross receipts of $3,500,000 or less over the previous three years, or is a manufacturer, as defined above, with 25 or fewer employees.

If a proposing Bidder is currently certified as a small or micro business by the Department of General Services, Office of Small Business and DVBE Services, or any city, county, federal, etc. certifying office, only a copy of that certification is required (to be certified small or micro business, visit the DGS website at www.pd.dgs.ca.gove/pd/Programs/OSDS.aspx). The successful Bidder will be required to provide this information for the small or micro business enterprises to be utilized as subcontractors.

The successful Bidder's SMP Goal will become part of the Contract resulting from this solicitation with the Lottery. The Lottery will monitor Bidder’s compliance by requiring annual reports. Agencies requesting either of the SMP Preferences are required to complete and submit the required forms.

(Revised 04/16)

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ATTACHMENT 5 SMALL AND MICRO BUSINESS PARTICIPATION PROGRAM

(Page 3 of 6)

INSTRUCTIONS/FORMS

All agencies must complete this page and the “Declaration of Compliance for Small Business and Micro Business Subcontractor Participation” form. Non-small agencies that are subcontracting with small or micro businesses must also complete the “Small and Micro Business Subcontractor” form, and agencies that are small businesses or micro businesses must complete the “Small Business and Micro Business Program” form. All forms are included in Attachment 4.

General Information Bidder's Name_______________________________________________________________ Contact Person______________________Telephone_______________Fax______________ Address____________________________________________________________________ City/State/Zip_______________________________________________________________ Declaration of Compliance for SMP Participation Form Complete and sign this form certifying all the information is true and correct. This form must be signed by the person legally authorized to contractually bind the Bidder. Small Business and Micro Business Subcontractor Form Complete and sign this form for all small business and micro business subcontractor that you plan to utilize as part of your small business participation goal. Please duplicate this page for additional companies. Small Business and Micro Business Program Form Complete and sign this form if your company is a certified small or micro business. CSL 1180 (N04/16)

RFP #50077 July 28, 2017 66

ATTACHMENT 5 SMALL BUSINESS AND MICRO BUSINESS

SUBCONTRACTOR FORM (Page 4 of 6)

Complete and sign this form for all small business and micro business subcontractor that you plan to utilize as part of your small business participation goal.

Please duplicate this page for additional companies.

Name of Subcontractor:______________________________________________________ Contact Person:____________________________________________________________ Address___________________________________________________________________ City/State/Zip_______________________________________________________________

Telephone_____________________________Fax__________________________________

Goods/Services to be provided_________________________________________________ Business Category ___Small __Micro Percentage of Contract_______________% Certifying Bidder______________________________ Certification #_____________ By signing below, the Bidder indicates its intent to utilize the small business or micro business identified above as part of the Contract associated with this solicitation, as applicable; and also certifies that all information contained herein is true and correct. ________________________________________ _________________________ Bidder's Authorized Signature Date _______________________________________ _________________________ Printed Name Company Name By signing below, the small business or micro business certifies it has been contacted, and has expressed interest in participating in the Contract in the area of work identified; and also certifies that all information contained herein is true and correct. _________________________________________ _________________________ Subcontractor's Authorized Signature Date _________________________________________ _________________________ Printed Name Company Name CSL 1177 (R04/16)

RFP #50077 July 28, 2017 67

ATTACHMENT 5 DECLARATION OF COMPLIANCE

FOR SMP PARTICIPATION (Page 5 of 6)

Complete and sign this form certifying all the information is true and correct.

This form must be signed by the person legally authorized to contractually bind the Bidder.

Bidder's Name______________________________________________________________ Contact Person:____________________________Telephone:_______________________ Address:_________________________________Fax:_____________________________ City:_________________________________Email__________________________________

Declaration I declare under penalty of perjury that the information provided in this Attachment is true and correct. (Please check one) _______ Our firm is a small business or micro business. _______ Our firm is not a small business or micro business, but guarantees that a minimum of ____% of the total cost will be paid to small business and micro business subcontractors for work performed under the Contract. _______ Our firm will not participate in the SMP Participation Program. Executed on___________________________ Month/Date/Year In the city of_________________________ State of______________________ Signature________________________________________________________ Authorized Representative Printed Name_____________________________________________________ Title____________________________________________________________ Telephone________________________Fax____________________________ CSL 1178 (R05/16)

RFP #50077 July 28, 2017 68

ATTACHMENT 5

Small Business & DVBE Program Form

Business Name Business Address

City State Zip Code Email

Name of Owner Telephone Number

Name of Contact Person Telephone Number

Business Category: Small DVBE Business Certified with: Agency Name

Microbusiness Certification #:

Check one that applies:____ Services

____ Goods

____ Information Technology

____ Construction

Services/Goods, etc. Provided:

By signing below, the Bidder certifies that the company above is a small business or microbusiness, as defined in this attachment.

Signature of Authorized Representative Date

Title

CSL 0718 (R04/16)

CALIFORNIA STATE LOTTERY SECURITY/LAW ENFORCEMENT DIVISION

CONTRACTOR DISCLOSURE

CONFIDENTIAL

GENERAL CONTRACTOR DISCLOSURE

CSL 0829B (R 04/23/08) (310.1.4)

IINNTTRROODDUUCCTTIIOONN

Government Code Section 8880.38 requires the Director, Security/Law Enforcement Division, to assure the integrity, honesty, and fairness in the operation and administration of the California Lottery. To accomplish this, the Director, Security/Law Enforcement Division, has the authority to conduct an examination of the qualifications of all prospective and current employees, prospective and current Lottery Game Retailers, and prospective and current Lottery suppliers as defined in the Government Code Section 8880.57. This includes the ability to access criminal history records and require fingerprinting. This informational form is designed to fulfill this requirement, and provide the Director, Security/Law Enforcement Division, the ability to adequately determine the contractor’s or prospective contractor’s qualifications. Completion of this form is a mandatory condition of contracting. Unless otherwise indicated, failure to provide all of the information requested on this questionnaire may prevent you from contracting with the California Lottery.

IINNSSTTRRUUCCTTIIOONNSS

Read each question carefully before answering. Type or neatly print an answer to each question. If a question does not apply, enter “N/A”. If the space provided is insufficient, enter the information requested on a separate piece of paper and include it with the disclosure package. Be sure to reference the number of the question you are answering. Do not misstate or omit any material fact(s). The applicant is hereby advised they are seeking the granting of a contract with the California Lottery, and that the burden of providing favorable qualification, is on the applicant at all times. Each page of this questionnaire, including attachments, must be initialed by the applicant or by a representative who has the authority to act on the applicant’s behalf and can attest to the accuracy of the information. The disclosure must be signed by the same person. This form must also be notarized. All applicants are advised this Contractor Disclosure Form is an official document of the California Lottery, Security/Law Enforcement Division. Any misrepresentation or failure to reveal information may be deemed sufficient cause for the refusal or revocation of a contract with the California Lottery.

PPRRIIVVAACCYY NNOOTTIICCEE

The California Information Practices Act of 1977 requires that this notice be provided on all state agency forms, which collect personal information. This information is being requested in order to examine your qualifications to be a contractor for the California Lottery as required by Government Code Section 8880.38 and to ensure compliance with section 8880.57 of the Act. The Information you provide will only be disclosed to those persons(s) who are authorized by law to have access. Confidentiality will be observed. The information you provide may be disclosed to other government and law enforcement agencies including, but not limited to: The State Controller’s Office, Department of Motor Vehicles (DMV), Department of Justice (DOJ), Federal Bureau of Investigation (FBI), and other federal, state and local law enforcement agencies. You have the right of restricted access to your background investigation records pursuant to Civil Code Sections 1798.38 and 1798.40 of the Information Practices Act and California Penal Code Sections 11080, 11081, 11105, and 11142. For further information on accessing your record, please contact the Lottery’s Public Records Act Coordinator, 600 North 10th Street, Sacramento, CA, 95811.

CONTRACTOR DISCLOSURE PAGE 1

CSL 0829B (R 04/23/08) (310.1.4)

INITIALS: __________

BBUUSSIINNEESSSS IINNFFOORRMMAATTIIOONN

NAME OF BUSINESS

TRADE NAME/DBA

STREET ADDRESS OF BUSINESS

CITY

STATE

ZIP CODE

TELEPHONE

STREET ADDRESS OF BUSINESS RECORDS

CITY

STATE

ZIP CODE

TELEPHONE

TYPE OF BUSINESS

SOLE PROPRIETORSHIP CORPORATION (CORP) TRUST

JOINT VENTURE GENERAL PARTNERSHIP LIMITED PARTNERSHIP

LIMITED LIABILITY PARTNERSHIP (LLP) LIMITED LIABILITY COMPANY (LLC) OTHER ________________________________

PRINCIPAL BUSINESS ACTIVITY

STATE OF INCORPORATION

IF BUSINESS IS FORMED IN A STATE OTHER THAN CALIFORNIA, HAS THE BUSINESS REGISTERED AS A FOREIGN ENTITY WITH THE CALIFORNIA SECRETARY OF STATE?

YES NO IF YES, ENTER FILE NUMBER HERE:

NAME OF PARENT COMPANY

STREET ADDRESS OF PARENT COMPANY

CITY

STATE

ZIP CODE

TELEPHONE

IS COMPANY:

CLOSELY HELD

PUBLICLY HELD ***IF PUBLICLY HELD, ATTACH MOST RECENT REPORT (10K, 10Q)***

BUSINESS ORGANIZATIONAL CHARTS: ATTACH A DIAGRAM DEPICTING DIRECT AND INDIRECT BUSINESS RELATIONSHIPS BETWEEN THE BUSINESS AND PARENT COMPANIES. DIAGRAM MUST IDENTIFY ALL COMPANIES UNTIL ULTIMATE OWNERSHIP HAS BEEN IDENTIFIED.

CSL 0829B (R 04/23/08) (310.1.4)

CONTRACTOR DISCLOSURE PAGE 2

DDIIRREECCTTOORR -- OOFFFFIICCEERR LLIISSTT

IF A BUSINESS IS A CORPORATION, LIST EACH DIRECTOR-OFFICER. IF YOU NEED ADDITIONAL SPACE, PLEASE MAKE PHOTOCOPIES OF THIS BLANK PAGE AND ATTACH ADDITIONAL PAGES TO THE BACK OF THIS FORM. INDICATE NUMBER OF DUPLICATED PAGES: PAGE _____ OF _____ GOVERNMENT CODE SECTION 8880.57(a)(1)

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

INITIALS: __________ CSL 0829B (R 04/23/08) (310.1.4)

INITIALS: __________

CONTRACTOR DISCLOSURE PAGE 3

OOWWNNEERRSS-- PPAARRTTNNEERRSS –– SSTTOOCCKKHHOOLLDDEERRSS

LIST ALL OWNERS-PARTNERS-STOCKHOLDERS WHO HOLD INTEREST IN THE BUSINESS OR CORPORATE STOCK. IF A PUBLICLY HELD CORPORATION, LIST THE STOCKHOLDERS KNOWN TO OWN 5% OR MORE OF THE CORPORATE STOCK. A COMPLETE CONTRACTOR DISCLOSURE MAY BE REQUIRED FOR EACH ENTITY THAT HOLDS A CONTROLLING INTEREST IN THE BUSINESS. GOVERNMENT CODE SECTION 8880.57(a)(1) IF YOU NEED ADDITIONAL SPACE, PLEASE MAKE PHOTOCOPIES OF THIS BLANK PAGE AND ATTACH ADDITIONAL PAGES TO THE BACK OF THIS FORM. INDICATE NUMBER OF DUPLICATED PAGES: PAGE _____ OF _____ NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

NAME

DATE OF BIRTH

SOCIAL SECURITY NUMBER

RESIDENCE STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

BUSINESS STREET ADDRESS

CITY

STATE

ZIP CODE

TELEPHONE

POSITION HELD

PERCENTAGE OF STOCK HELD

CSL 0829B (R 04/23/08) (310.1.4)

CONTRACTOR DISCLOSURE PAGE 4

GGAAMMIINNGG GGOOOODDSS//SSEERRVVIICCEESS

HAS THE BUSINESS EVER ENTERED INTO A JOINT VENTURE OR OTHER CONTRACTUAL ARRANGEMENT TO SUPPLY ANY STATE OR JURISDICTION WITH GAMING GOODS OR SERVICES, INCLUDING, BUT NOT LIMITED TO LOTTERY GOODS AND SERVICES. GOVERNMENT CODE SECTION 8880.57(b)(8)

YES NO IF YES, PROVIDE A LIST OF THE STATE OR JURISDICTIONS IN WHICH THE GOODS OR SERVICES WERE PROVIDED, INCLUDING A DESCRIPTION OF THE GOODS OR SERVICES PROVIDED AND THE DATES. DATE STATE/JURSIDICTION GOODS AND SERVICES PROVIDED TERM OF CONTRACT

A B C D E F

LLEEGGAALL PPRROOCCEEEEDDIINNGGSS

HAS THE BUSINESS, ANY OWNER, OFFICER, DIRECTOR OR STOCKHOLDER OF THE BUSINESS, OR, IN THE EVENT OF A PUBLICLY HELD CORPORATION, THOSE STOCKHOLDERS OWNING 5% OR MORE OF THE CORPORATE STOCK, EVER BEEN CONVICTED IN A STATE OR FEDERAL COURT OF ANY GAMBLING RELATED OFFENSE OR CRIMINAL OFFENSE OTHER THAN A TRAFFIC VIOLATION? GOVERNMENT CODE SECTION 8880.57(b)(4)

YES NO DEFENDANT(S) NAME, NATURE OF PROCEEDINGS. PROVIDE DATE POSITION HELD IN BUSINESS COURT LOCATION, CITY & STATE DOCKET #/CASE/FILE/OTHER IDENTIFIER

A B C D E F

CSL 0829B (R 04/23/08) (310.1.4)

INITIALS: __________

CONTRACTOR DISCLOSURE PAGE 5

LLEEGGAALL PPRROOCCEEEEDDIINNGGSS

HAS THE BUSINESS EVER BEEN A DEFENDANT OR RESPONDENT IN ANY OF THE FOLLOWING: GOVERNMENT CODE SECTION 8880.57(b)(10)

YES NO

IF YES, PROVIDE SPECIFICS OF EACH INCIDENT AS WELL AS THE CURRENT STATUS/DISPOSITION.

ANTI-TRUST CASE

TRADE REGULATION VIOLATIONS

SECURITY JUDGEMENTS

LICENSE DENIALS, SUSPENSIONS OR DISCIPLINARY ACTION

ANY TAX LIENS

FRANCHISE TAX BOARD SUSPENSIONS

HAS THE BUSINESS EVER BEEN THE SUBJECT OF A BANKRUPTCY, INSOLVENCY OR REORGANIZATION OR ANY JUDGEMENT OR PENDING LITIGATION INVOLVING FRAUD OR DECEIT? GOVERNMENT CODE SECTION 8880.57(b)(5)

YES NO IF YES, PROVIDE THE INFORMATION REQUESTED BELOW. PROVIDE, ON A SEPARATE PIECE OF PAPER, A DETAILED EXPLANATION OF THE ALLEGATIONS. INCLUDE SPECIFICS AS TO THE CURRENT, KNOWN STATUS OF THE PROCEEDING. DATE DOCKET # NAME, ADDRESS PRESIDING COURT NAME, ADDRESS FILING PARTY NAME, ADDRESS OF TRUSTEE

A B C D E F

INITIALS: __________

CSL 0829B (R 04/23/08) (310.1.4)

CONTRACTOR DISCLOSURE PAGE 6

DDOONNAATTIIOONNSS

LIST ALL REPORTABLE CONTRIBUTIONS BY THE BUSINESS TO ANY LOCAL, STATE OR FEDERAL POLITICAL COMMITTEE IN CALIFORNIA FOR THE PAST FIVE YEARS THAT IS REPORTABLE UNDER ANY EXISTING STATE OR FEDERAL LAW. GOVERNMENT CODE SECTION 8880.57(b)(7) CANDIDATE’S NAME CANDIDATE’S OFFICE/JURISDICTION DATE OF CONTRIBUTION AMOUNT CONTRIBUTED

A B C D E F G H

SSUUBBCCOONNTTRRAACCTTOORRSS

LIST ALL KNOWN SUBCONTRACTORS THE BUSINESS INTENDS TO UTILIZE WITH THE CSL CONTRACT IF AWARDED THE CONTRACT. LIST THE NAME(S), ADDRESS(ES), AND CONTACT PERSON(S) FOR EACH SUBCONTRACTOR. IDENTIFY IN DETAIL THE SERVICE EACH SUBCONTRACTOR IS TO PROVIDE, INCLUDING THE MONETARY VALUE OF THE SUB-CONTRACT. ALSO PROVIDE COPIES OF PERTINENT AGREEMENTS MADE WITH EACH SUBCONTRACTOR. GOVERNMENT CODE SECTION 8880.57(a)(7)

INITIALS: __________ CSL 0829B (R 04/23/08) (310.1.4)

INITIALS: __________

CONTRACTOR DISCLOSURE PAGE 7

AATTTTAACCHHMMEENNTT CCHHEECCKK LLIISSTT

PLEASE ATTACH COPIES OF THE BELOW LISTED DOCUMENTS TO YOUR DISCLOSURE PACKAGE. PLACE “N/A” TO THE LEFT OF THE DOCUMENT NAME IF THE DOCUMENT DOES NOT APPLY. FAILURE TO PROVIDE A REQUIRED DOCUMENT MAY BE DEEMED SUFFICIENT CAUSE FOR REJECTING A BID.

Initial Formation/Registration Documents (Articles of Incorporation/Organization, Certificate of Limited Partnership, LLP Registration, etc…) All Amendment Documents Annual Statement of Information (last change and current, if current reports no change of information) (Corp or LLC Only) Corporate Disclosure Statement (Publicly Traded Corp) Partnership Agreement (Limited and General Partnerships) Trust Agreement Joint Venture Agreement Charter By Laws Organization Chart Annual Reports Quarterly Reports Interim Reports Financial Reports (last 3 years) Bankruptcy Filings, Receivership Proceedings

CSL 0829B (R 04/23/08) (310.1.4)

CONTRACTOR DISCLOSURE PAGE 8

STATE OF: _____________________________

COUNTY OF: ___________________________ I, _________________________________, have read the foregoing disclosure documentation and know the contents thereof; that the statements contained herein are true and correct and contain a full and true account of information requested; that this statement is executed with the knowledge that misrepresentation or failure to reveal information requested may be deemed sufficient cause for rejecting the submitted bid. Further, that I am aware that later discovery of an omission or misrepresentation made in the above statements may be grounds for denying or canceling a contract. I also understand that public disclosure of this application is governed by the California Public Records Act and Government Code Section 6250, et seq., which mandates disclosure of this application, upon request, except for information concerning personal worth, personal financial data, criminal history, military discipline, and personal information such as home telephone number, home address, social security number, driver’s license number, etc.

I swear under penalty of perjury and the laws of the State of California

that the foregoing is true and correct. _________________________________ Signature of Applicant Subscribed and Sworn to before me this ________________day Of____________________, 20___________. ______________________________________________________ (SEAL) Notary Public

INITIALS: __________ CSL 0829B (R 04/23/08) (310.1.4)